Assessment 3 Instructions: Plant Assets and Receivables Aging

Presented below are a series of unrelated situations. Use the Assessment 3 Template to record your answers to the questions or solve the problems relating to each of the five independent situations. Where appropriate, show all calculations leading to the final solution.

Problem 1

Spooner Company’s unadjusted trial balance at December 31, 2018, included the following accounts.

Debit Credit

Allowance for doubtful accounts $3,500

Net sales $825,000

Spooner Company estimates its bad debt expense to be 2% of net sales. Determine its bad debt expense for 2018.

Problem 2

An analysis and aging of Johnson Corp. accounts receivable at December 31, 2018, disclosed the following:

Amounts estimated to be uncollectible $99,000

Accounts receivable 962,500

Allowance for doubtful accounts (per books) 68,750

What is the net realizable value of Johnson’s receivables at December 31, 2018?

Problem 3

Midwest Pool Co. provides for doubtful accounts based on 1.5% of credit sales. The following data are available for 2018.

Credit sales during 2018 $1,155,000

Allowance for doubtful accounts 1/1/18 9,350

Collection of accounts written off in prior years

(customer credit was reestablished) 4,400

Customer accounts written off as uncollectible during 2018 16,500

What is the balance in the Allowance for Doubtful Accounts at December 31, 2018?

Problem 4

At the end of its first year of operations, December 31, 2018, Chevy Chase Inc. reported the following information.

Accounts receivable, net of allowance for doubtful accounts $522,500

Customer accounts written off as uncollectible during 2018 13,200

Bad debt expense for 2018 46,200

What should be the balance in accounts receivable at December 31, 2018, before subtracting the allowance for doubtful accounts?

Problem 5

The following accounts were taken from Assistance, Inc.’s trial balance at December 31, 2018.

Debit Credit

Net credit sales $825,000

Allowance for doubtful accounts $ 15,400

Accounts receivable $451,000

If doubtful accounts are 2% of accounts receivable, determine the bad debt expense to be reported for 2018.