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Chapter 9 Exercises

The document contains 8 practice questions related to accounting for receivables and bad debts. The questions cover topics such as estimating bad debts using the percentage of sales method, recording bad debt expense and write-offs, calculating account balances, and preparing journal entries for notes receivable.

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136 views4 pages

Chapter 9 Exercises

The document contains 8 practice questions related to accounting for receivables and bad debts. The questions cover topics such as estimating bad debts using the percentage of sales method, recording bad debt expense and write-offs, calculating account balances, and preparing journal entries for notes receivable.

Uploaded by

Chu Thị Thủy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 9 exercises

1. A company used the percent of sales method to determine its bad debts expense. At the end
of the current year, the company's unadjusted trial balance reported the following selected
amounts:

   
All sales are made on credit. Based on past experience, the company estimates 0.6% of
credit sales to be uncollectible. What adjusting entry should the company make at the end
of the current year to record its estimated bad debts expense

A. 

B. 

C. 

D. 

E. 

2. The Connecting Company uses the percent of sales method of accounting for uncollectible
accounts receivable. During the current year, the following transactions occurred:

   

a. Prepare the general journal entries to record these transactions.


b. If the balance of the allowance for uncollectible accounts was $8,000 on January 1 of the current
year, determine the balance of the allowance for uncollectible accounts at December 31 of the
current year. Assume that the transactions above are the only transactions affecting the allowance
for uncollectible accounts during the year.   
3. Assume that a company's bad debts are estimated and recorded as 2% of Account receivable.

Accounts receivable .... $125000

Sales revenue............ $1280000

Previous balance of Allowance for doubtful accounts ..... $1600

75% of sales was made on credit.


a. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the
balance sheet after adjustment.
b. Prepare the entry to write off a $1,500 account receivable on January 1 of the next year.
c. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the
balance sheet immediately after writing off the account in part 2.     

4. A company that uses the percent of sales to account for its bad debts had credit sales of $740,000
in 2008, including a $720 sale to Helen Sweet. On December 31, 2008, the company estimated its
bad debts at 1.5% of its credit sales. On June 1, 2009, the company wrote off, as uncollectible, the
$720 account of Helen Sweet. On December 21, 2009, Helen Sweet unexpectedly paid her account in
full. Prepare the necessary journal entries:
(a) on December 31, 2008, to reflect the estimate of bad debts expense; (b) on June 1, 2009, to write
off the bad debt; and (c) on December 21, 2009, to record the unexpected collection.  

5. XYZ company has opening balance of accounts receivable account of $530. During the period, the
company received $300 paid by customers for their debts and made credit sales for $1230, and
wrote-off $200 uncollectible account. What is the balance of accounts receivable at the end of the
period?

6. On 5 May, 2011, the company sold goods for $500 on credit and received a note from its
customer. It was a $500, 10%, 90-day note. Prepare entries for receipt (issuance) and payment of the
note?

7. On 6 December 2011, the company lent its partner $600 cash and received a note. That was a
$600, 12%, 60 day note.

Prepare journal entries relating this note?

8. C company owed the company $2000. On 2/3 The company decided that C Company could not
paid its debt, so wrote-off its AR.

On 5/5 C company paid $1200.

Prepare journal entries, company uses direct write-off method.


Solutions

1. D

2.

3.

4.

5. E.B = 530 – 300 + 1230 = $1460

6. 5 May: Dr Note receivable 500

Cr Sale revenue 500


3 August Dr Cash 512.5

Cr Interest earned 12.5

Cr Note receivable 500

7. 6 Dec 2011, Dr Note receivable 600

Cr Cash 600

31 Dec 2011, Dr Interest receivable 5

Cr Interest earned 5

4 Feb, 2012 Dr Cash 612

Cr Interest earned 7

Cr Interest receivable 5

Cr Note receivable 600

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