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Category > Accounting Posted 19 Apr 2017 My Price 12.00

ACC 201 Chapter 8 Problem set A

Problem 8-1A (Part Level Submission)

At December 31, 2013, Dean Co. reported the following information on its balance sheet.

Accounts receivable		$960,000
Less: Allowance for doubtful accounts		70,000

During 2014, the company had the following transactions related to receivables.

1.	Sales on account	$3,315,000
2.	Sales returns and allowances	50,000
3.	Collections of accounts receivable	2,810,000
4.	Write-offs of accounts receivable deemed uncollectible	90,000
5.	Recovery of bad debts previously written off as uncollectible	29,000

A to D parts

Problem 8-2A

Information related to Hamilton Company for 2014 is summarized below.

Total credit sales		$2,500,000
Accounts receivable at December 31		970,000
Bad debts written off		66,000

(a)		What amount of bad debts expense will Hamilton Company report if it uses the direct write-off method of accounting for bad debts? $

(b)		Assume that Hamilton Company estimates its bad debts expense to be 3% of credit sales. What amount of bad debts expense will Hamilton record if it has an Allowance for Doubtful Accounts credit balance of $4,000? $

(c)		Assume that Hamilton Company estimates its bad debts expense based on 7% of accounts receivable. What amount of bad debts expense will Hamilton record if it has an Allowance for Doubtful Accounts credit balance of $3,000? $

(d)		Assume that Hamilton Company estimates its bad debts expense based on 7% of accounts receivable. What amount of bad debts expense will Hamilton record if it has an Allowance for Doubtful Accounts debit balance of $3,000? $

Problem 8-3A (Part Level Submission)

Presented below is an aging schedule for Sycamore Company.

			Number of Days Past Due
Customer	Total	Not Yet Due	1–30	31–60	61–90	Over 90
Anders	$ 28,000		$12,000	$16,000
Blake	40,000	$ 40,000
Cyrs	57,000	16,000	6,000		$35,000
De Jong	34,000					$34,000
Others	132,000	96,000	16,000	14,000		6,000
	$291,000	$152,000	$34,000	$30,000	$35,000	$40,000
Estimated percentage uncollectible		2%	6%	13%	25%	60%
Total estimated bad debts	$ 41,730	$ 3,040	$ 2,040	$ 3,900	$ 8,750	$24,000

At December 31, 2014, the unadjusted balance in Allowance for Doubtful Accounts is a credit of $9,000.

Problem 8-4A (Part Level Submission)

Mineo Inc. uses the allowance method to estimate uncollectible accounts receivable. The company produced the following aging of the accounts receivable at year-end.

(a)

Calculate the total estimated bad debts based on the below information.

		Number of Days Outstanding
	Total	0–30	31–60	61–90	91–120	Over 120
Accounts receivable	193,000	70,000	46,000	39,000	23,000	$15,000
% uncollectible		1%	3%	5%	8%	10%
Estimated bad debts	$

Problem 8-5A

At December 31, 2014, the trial balance of Roberto Company contained the following amounts before adjustment.

	Debits	Credits
Accounts Receivable	$385,000
Allowance for Doubtful Accounts		$ 800
Sales Revenue		918,000

(a)		Based on the information given, which method of accounting for bad debts is Roberto Company using—the direct write-off method or the allowance method?

(b)		Prepare the adjusting entry at December 31, 2014, for bad debts expense under each of the following independent assumptions.
		(1) An aging schedule indicates that $11,750 of accounts receivable will be uncollectible.
		(2) The company estimates that 1% of sales will be uncollectible.
(c)		Repeat part (b) assuming that instead of a credit balance there is an $800 debit balance in Allowance for Doubtful Accounts.
(d)		During the next month, January 2015, a $3,000 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off.
(e)		Repeat part (d) assuming that Roberto uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable.

(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Problem 8-6A (Part Level Submission)

Hilo Company closes its books monthly. On September 30, selected ledger account balances are:

Notes Receivable		$31,000
Interest Receivable		170

Notes Receivable include the following.

Date	Maker	Face	Term	Interest
Aug. 16	Demaster Inc.	$ 8,000	60 days	8%
Aug. 25	Skinner Co.	9,000	60 days	10%
Sept. 30	Almer Corp.	14,000	6 months	9%

Interest is computed using a 360-day year. During October, the following transactions were completed.

Oct. 7		Made sales of $6,300 on Hilo credit cards.
12		Made sales of $1,200 on MasterCard credit cards. The credit card service charge is 3%.
15		Added $460 to Hilo customer balance for finance charges on unpaid balances.
15		Received payment in full from Demaster Inc. on the amount due.
24		Received notice that the Skinner note has been dishonored. (Assume that Skinner is expected to pay in the future.)

Problem 8-7A

On January 1, 2014, Derek Company had Accounts Receivable $139,000, Notes Receivable $30,000, and Allowance for Doubtful Accounts $13,200. The note receivable is from Kaye Noonan Company. It is a 4-month, 12% note dated December 31, 2013. Derek Company prepares financial statements annually. During the year, the following selected transactions occurred.

Jan. 5		Sold $24,000 of merchandise to Zwingle Company, terms n/15.
20		Accepted Zwingle Company’s $24,000, 3-month, 9% note for balance due.
Feb. 18		Sold $8,000 of merchandise to Gerard Company and accepted Gerard’s $8,000, 6-month, 8% note for the amount due.
Apr. 20		Collected Zwingle Company note in full.
30		Received payment in full from Kaye Noonan Company on the amount due.
May 25		Accepted Isabella Inc.’s $4,000, 3-month, 7% note in settlement of a past-due balance on account.
Aug. 18		Received payment in full from Gerard Company on note due.
25		The Isabella Inc.’s note was dishonored. Isabella Inc.’s is not bankrupt; future payment is anticipated.
Sept. 1		Sold $12,000 of merchandise to Fernando Company and accepted a $12,000, 6-month, 10% note for the amount due.

Journalize the transactions. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to the nearest whole dollar, e.g. 5,275.)

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SmartExpert

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Status NEW Posted 19 Apr 2017 08:04 AM My Price 12.00

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file 1492590529-ACC 201 Chapter 8 Problem set A Answers.docx preview (1779 words )

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