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CH 5 Assignment Solution

The document provides financial data including accounts receivable, allowance for doubtful accounts, and bad debt expense for a company. It outlines adjusting entries for bad debt, the balance sheet for accounts receivable, and journal entries related to notes receivable and interest. Additionally, it compares the statement of financial position for current assets between two years.

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8 views3 pages

CH 5 Assignment Solution

The document provides financial data including accounts receivable, allowance for doubtful accounts, and bad debt expense for a company. It outlines adjusting entries for bad debt, the balance sheet for accounts receivable, and journal entries related to notes receivable and interest. Additionally, it compares the statement of financial position for current assets between two years.

Uploaded by

luciacontessi02
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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E6–8.

Accounts Receivable (Gross)


Beg. balance 48,067 289,850 Collections on acct.
Sales on account 304,423 6,969 Write-offs
End. balance 55,671

Allowance for Doubtful Accounts


8,384 Beg. balance
Write-offs 6,969 4,685 Bad debt exp.
6,100 End. balance

Income statement:
Selling, general, and administrative expenses:
Bad debt expense ........................................................ $4,685

Statement of Financial Position:


Current assets
Accounts receivable ................................... $55,671
Less: Allowance for doubtful accounts ........ 6,100 $49,571

E6–14.
Req. 1
December 31-Adjusting entry:
Bad debt expense (+E, –SE) ....................................... 4,180
Allowance for doubtful accounts (+XA, –A)....... 4,180
To adjust for estimated bad debt expense for the current year computed as follows:

Estimated Estimated
percentage amount
Aged accounts receivable uncollectible uncollectible
Not yet due $50,000 x 3% = $ 1,500
Up to 180 days past due 14,000 x 12% = 1,680
Over 180 days past due 4,000 x 30% = 1,200
Estimated balance in Allowance for Doubtful Accounts 4,380
Current balance in Allowance for Doubtful Accounts 200
Bad Debt Expense for the year $ 4,180

Req. 2
Balance sheet:
Accounts receivable ($50,000 + $14,000 + $4,000) $68,000
Less allowance for doubtful accounts ..................... 4,380
Accounts receivable, net of allowance for
doubtful accounts ......................................... $63,620
P 5-68A

Journal
DATE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT
20X6
Oct. 31 Note Receivable — Buy Low Foods…. 36,000
Sales Revenue…………………… 36,000

Dec. 31 Interest Receivable


($36,000 × .0650 × 2/12)………………… 390
Interest Revenue……………… 390

20X7
Jan. 31 Cash………………………………………... 36,585
Note Receivable -Buy Low Foods 36,000
Interest Receivable……………… 390
Interest Revenue
($36,000 × .0650 × 1/12)… 195

Feb. 18 Note Receivable — Dutton Market …… 7,400


Accounts Receivable —
Dutton Market…………………… 7,400

19 Cash……………………………………. 7,300
Financing Expense……………………… 100
Note Receivable — Dutton Market 7,400
(continued) P 5-68A

Journal
DATE ACCOUNT TITLES AND EXPLANATION DEBIT CREDIT
20X7
Nov. 11 Note Receivable — Street Provisions …. 16,400
Cash…………………………………… 16,400

Dec. 31 Interest Receivable………………………... 213


Interest Revenue ($16,400 × .095 × 50/365) 213

Req. 2

December 31,

Statement of Financial Position 20X7 20X6

Current assets:

Note receivable………………… $16,400 $36,000

Interest receivable…………… 213 390

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