After analyzing the current accounts receivable, your company decides that the allowance for doubtful accounts should have an ending normal balance of $6,880. There is a $1,130 debit balance in the account. Prepare the journal entry to set up the required allowance.
Do not enter dollar signs or commas in the input boxes.
| Date | Account Title and Explanation | Debit | Credit |
| Dec 31 | |||
Correct
Marks for this submission: 4/4.
Question 2
Marks: 2/2
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Scapegoat Company has net accounts receivable opening balance of $291,000 and ending balance of $265,000. The total sales amount for the year is $1,700,000, of which 84% are on credit. Normal credit terms are 30 days. Calculate the day sales outstanding ratio and the accounts receivable turnover.
Do not enter dollar signs or commas in the input boxes.
Round your answers to 2 decimal places.
Day sales outstanding: days
Accounts Receivable Turnover: times
Correct
Marks for this submission: 2/2.
Question 3
Marks: 5/5
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The following chart is prepared by the accountant of Happy Shoes Inc. The percentages are based on historical performance. Happy Shoes Inc. uses the balance sheet approach to estimate uncollectible receivables.
Do not enter dollar signs or commas in the input boxes.
a) Calculate the company’s bad debt.
| Aging Category | Bad Debt % | Balance | Estimated Bad Debt |
| 30 days | 1.5% | $86,000 | |
| 31 60 days | 3% | $45,000 | |
| over 60 days | 5.5% | $17,000 | |
| Total | $148,000 |
b) Assume that allowance for doubtful accounts has a debit balance of $1,100. Calculate the amount of bad debt expense the company will record.
Bad Debt Expense: $
Correct
Marks for this submission: 5/5.
Question 4
Marks: 11/11
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Williams Canada operates in an industry that has a high rate of bad debts. Before the year end adjustments on November 30, Williams Canada’s accounts receivable has a debit balance of $592,000 and the allowance for doubtful accounts has a credit balance of $16,800. The year end balance reported on the balance sheet for the allowance for doubtful accounts will be based on the aging schedule shown below:
Do not enter dollar signs or commas in the input boxes.
a) Fill in the table to calculate the balance for the Allowance for Doubtful Accounts.
| Aging Category | Bad Debt % | Balance | Estimated Bad Debt |
| Less than 16 days | 2% | $333,000 | |
| 16 30 days | 3.5% | $127,000 | |
| 31 45 days | 5% | $62,000 | |
| 46 60 days | 12% | $31,000 | |
| 61 75 days | 21% | $28,000 | |
| Over 75 days | 41% | $11,000 | |
| Total | $592,000 |
b) Prepare the journal entry to record bad debt expense for the year.
| Date | Account Title and Explanation | Debit | Credit |
| Nov 30 | |||
Correct
Marks for this submission: 11/11.
Question 5
Marks: 4/4
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On February 19, you discover that your customer, Melvin Binger, has gone bankrupt. He owes you $1,440. Prepare the appropriate journal entry assuming the direct method is used.
Do not enter dollar signs or commas in the input boxes.
| Date | Account Title and Explanation | Debit | Credit |
| Feb 19 | |||
Correct
Marks for this submission: 4/4.
Question 6
Marks: /31
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Tim Barry owns a toy shop called Tim’s Toys. The total accounts receivable balance of Tim’s Toys on January 31 was $81,000. On February 1, Mr. L. Smith who owes the company $12,000 informs that he will be unable to pay the amount owing in the present year. However, he agrees to sign a two year note to be paid in semi annual installments, plus 2% interest on the balance outstanding. The company’s year end is December 31.
Calculate the interest revenue and payment amounts for each year.
Do not enter dollar signs or commas in the input boxes.
Round your answers to the nearest whole dollar.
| Date | Opening Balance (a) | Interest (b) | Total (a+b) | Payment | Closing Balance |
| Feb 1, 2011 | |||||
| Aug 1, 2011 | |||||
| Feb 1, 2012 | |||||
| Aug 1, 2012 | |||||
| Feb 1, 2013 |
b) Prepare the journal entry on February 1, 2011 when the note is signed and on August 1, 2011 when the first payment is made.
Enter the credit accounts in alphabetical order.
| Date | Account Title and Explanation | Debit | Credit |
| Feb 1 | |||
| Issue note receivable to replace accounts receivable | |||
| Aug 1 | |||
| Record receipt of interest and principal | |||
Question 7
Marks: /4
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B&B Inc. uses the allowance method to account for uncollectible receivables. During 2012, the company made total credit sales of $1,090,000, of which $211,000 was currently owed by customers. According to the company’s historical sales, 1.5% of total sales will be uncollected. B&B Inc. uses an income statement approach to estimate the amount of uncollectible receivables. The company’s year end is December 31.
Prepare the journal entry to account for the amount deemed uncollectible.
Do not enter dollar signs or commas in the input boxes.
| Date | Account Title and Explanation | Debit | Credit |
| Feb 28 | |||
Question 8
Marks: /8
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On May 31, 2011, Mann Company’s accounts receivable ledger showed an ending balance of $31,000. The company realized that $1,550 of accounts receivable was uncollectible because a customer went bankrupt. Prepare a journal entry to demonstrate the treatment of $1,550 uncollectible amount using (a) direct method and (b) allowance method.
Do not enter dollar signs or commas in the input boxes.
a) Direct Method
| Date | Account Title and Explanation | Debit | Credit |
| May 31 | |||
| Date | Account Title and Explanation | Debit | Credit |
| May 31 | |||
Attachments:
account chpte….docx