Re: Accounting Homework

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Data & Forms P09-01

Problem 9-1: Allowance Write-Off Method of Dealing with Bad Debts Student Name:
Given Data P09-01 1. Journalize transactions a through f in the general journal below.
Company's data and journal entry information:
General Journal
Selected account balances from a company's general ledger are listed below.
Cash $200,000 Trans.
Accounts Receivable (beginning balance) 107,000 No. Account Titles Debit Credit
Allowance for Doubtful Accounts (beginning normal
balance) 5,000 1a
Instructions:
1b
1. Journalize the transactions a through f assuming the company uses
the allowance write-off method.
a. Made cash sales of $1,000,000. 1c
b. Made credit sales of $800,000.
c. Collected $700,000 during year from customers on account.
d. Wrote off bad debts of $7,000 per year. 1d
e. Recovered bad debts of $600 from previous year.
f. Recovered bad debts of $400 from current year.
1e
2. Post transactions a through f to the general ledger accounts provided
below the general journal.
3. After posting a through f, the balance of the Allowance for Bad Debts
account should be a $1,000 debit. Assuming a debit of $1,000, 1f
a. Calculate the year-end bad debt adjusting entry amount assuming the
company uses the aging of receivables method and realizable
receivables are estimated at 95% of ending accounts receivable and
journalize the adjusting entry. (Hint: What is bad debt amount?)
b. Calculate the year-end bad debt adjusting entry amount assuming the
company uses the percent of sales method where 1.25% of credit
sales are estimated to be uncollectible and journalize the adjusting entry. 2. Post transactions a through f to the following general ledger accounts.
4. Assume the Allowance for Bad Debts account had a $1,000 normal credit General Ledger Accounts
balance instead of the debit balance.
a. Calculate the year-end bad debt adjusting entry amount if the Cash Account No. 101
company uses the aging of receivables method and realizable Trans. Explanation Debit Credit Balance
receivables are estimated at 95% of ending accounts receivable Bal. 200,000 200,000
and journalize the adjusting entry. (Hint: What is bad debt amount?) a
b. Calculate the year-end bad debt adjusting entry amount if the c
company uses the percent of sales method where 1.25% of credit e
sales are estimated to be uncollectible and journalize the adjusting entry. f
Note: The allowance write-off method estimates bad debts and records this Accounts Receivable Account No. 102
estimate in the year of the sales. Thus, the allowance method is considered Date Explanation Debit Credit Balance
better than the direct write-off method because it does match revenues and Bal. 107,000 107,000
expenses in the same accounting period. It uses an Allowance account and b
makes an adjusting entry at the end of each fiscal period. c
d
e
e
f
f
Allowance for Bad Debts Account No. 103
Date Explanation Debit Credit Balance
Bal. 5,000 5,000
d
e
f
Capital Account No. 301
Date Explanation Debit Credit Balance
Bal. 302,000 302,000
Sales Account No. 401
Date Explanation Debit Credit Balance
a
b
3. After posting a through f, the balance of the Allowance for Bad Debts
0 account should be a $1,000 debit. Assuming a debit of $1,000,
a. Calculate the year-end bad debt adjusting entry amount assuming the
company uses the aging of receivables method and realizable
receivables are estimated at 95% of ending accounts receivable and
journalize the adjusting entry. (Hint: What is bad debt amount?)
b. Calculate the year-end bad debt adjusting entry amount assuming the
company uses the percent of sales method where 1.25% of credit
sales are estimated to be uncollectible and journalize the adjusting entry.
Note: 3a
When using the aging of receivables method, the balance in
the Allowance account must be considered.
When using the percent of sales mehtod, the Allowance 3b
account balance is not considered.
4. Assume the Allowance for Bad Debts account had a $1,000 normal credit
balance instead of the debit balance.
a. Calculate the year-end bad debt adjusting entry amount if the
company uses the aging of receivables method and realizable
receivables are estimated at 95% of ending accounts receivable
and journalize the adjusting entry. (Hint: What is bad debt amount?)
b. Calculate the year-end bad debt adjusting entry amount if the
company uses the percent of sales method where 1.25% of credit
sales are estimated to be uncollectible and journalize the adjusting entry.
Note: 4a
When using the aging of receivables method, the balance in
the Allowance account must be considered.
When using the percent of sales mehtod, the Allowance 4b
account balance is not considered.

Data & Forms P09-02

Problem 9-2: Direct Write-Off Method of Accounting for Bad Debts Student Name:
Given Data: 1. Journalize transactions a through f in the general journal below.
Company's data and journal entry information:
General Journal
Selected account balances from a company's general ledger are listed
below. Trans.
Cash $200,000 No. Account Titles Debit Credit
Accounts Receivable (beginning balance) 102,000
1a
Instructions:
1b
1. Journalize the transactions a through f assuming the company uses
the direct write-off method.
a. Made cash sales of $1,000,000. 1c
b. Made credit sales of $800,000.
c. Collected $700,000 during year from customers on account.
d. Wrote off bad debts of $7,000 per year. 1d
e. Recovered bad debts of $600 from previous year.
f. Recovered bad debts of $400 from current year.
1e
2. Post transactions a through f to the general ledger accounts provided
below the general journal.
Notes: 1f
The direct write-off method waits until it is determined who is not
going to pay and then the account is written off directly to the Bad Debts
Expense account. There is no Allowance account used; therefore, there
are no adjusting entries to make. A bad debt may be recorded in a year
different from the year of the sale. Thus, the direct write-off method is not
the best method because it does not match revenues and expenses in the
same accounting period. 2. Post transactions a through f to the following general ledger accounts.
Bad Debts Recovered is used to show cash collections for accounts General Ledger Accounts
written off in previous accounting periods. It is a contra expense account,
which is deducted from Bad Debts Expense on the income statement. Cash Account No. 101
Trans. Explanation Debit Credit Balance
Bal. 200,000 200,000
a
c
e
f
Accounts Receivable Account No. 102
Date Explanation Debit Credit Balance
Bal. 102,000 102,000
b
c
d
e
e
f
f
Capital Account No. 301
Date Explanation Debit Credit Balance
Bal. 302,000 302,000
Sales Account No. 401
Date Explanation Debit Credit Balance
a
b
Bad Debts Expense Account No. 501
Date Explanation Debit Credit Balance
d
f
Note: Bad Debts Recovered is used to show cash collections for accounts Bad Debts Recovered (a contra expense account) Account No. 502
written off in previous accounting periods. It is a contra expense account, Date Explanation Debit Credit Balance
which is deducted from Bad Debts Expense on the income statement. e

Data & Forms P09-03A

Problem 9-3: Notes Receivable Student Name:
Given Data:
Instructions: General Journal
Journalize and post the following note transactions. (Use 360 days in a Trans.
year for interest calculations.) No. Account Titles Debit Credit
1a. Received a $30,000, 90-day, 12% note from a sale on October 1 and 1a
1b. Collected the note and interest on December 30 (within the same
period).
1b
2a. Received a $40,000, 90-day, 12% note from customer to apply on
account on December 1.
2b. Make adjusting entry for accrued interest on December 31.
2c. Collected note on March 1 (collected in different period from receipt). 2a
3a. Received a $60,000, 60-day, 10% note for loaning cash on October 1.
3b. Customer dishonored note on November 30. 2b
4. Sold $20,000 of accounts receivable and is charged a 3% factoring fee.
2c
5. Borrowed $30,000 cash, pledging receivables of $35,000 as security.
6. Made credit card sales of $1,000 with a 3% fee, receiving cash
immediately.
3a
7a. Made credit card sales of $1,000 with a 3% fee, for which credit card
sales receipts are remitted electronically to credit card company.
7b. Received cash from credit card company through electronic funds 3b
transfer.
4
5
6
7a
7b
2. Post transactions 1 through 7 to the following general ledger accounts.
General Ledger Accounts
Cash Account No. 101
Trans. Explanation Debit Credit Balance
Bal. 100,000 100,000
1b
2c
3a
4
5
6
7b
Notes Receivable Account No. 102
Date Explanation Debit Credit Balance
1a
1b
2a
2c
3a
3b
Accounts Receivable Account No. 103
Date Explanation Debit Credit Balance
Bal. 100,000 100,000
2a
3b
4
7a
7b
Interest Receivable Account No. 103
Date Explanation Debit Credit Balance
2b
2c
Accounts Payable Account No. 201
Date Explanation Debit Credit Balance
5
Sales Account No. 401
Date Explanation Debit Credit Balance
Bal. 200,000 200,000
1a
6
7a
Interest Revenue Account No. 402
Date Explanation Debit Credit Balance
1b
2b
2c
3b
Factory Fee Expense Account No. 501
Date Explanation Debit Credit Balance
4
Credit Card Expense Account No. 502
Date Explanation Debit Credit Balance
6
7a