Question

Name __ 1. The balance in accounts receivable is $687,000. At the end of October, Ace Company management estimates the uncollectible accounts expense to be 1 percent of net sales of $2,770,000. 1a. Give the entry to record the uncollectible accounts expense, assuming that the Allowance for Uncollectible Accounts has a debit balance of $14,000. DR ACCOUNT _____uncollectible accounts expense____ AMOUNT $___ CR ACCOUNT _To record estimated uncollectible accounts___________ AMOUNT $_

1b. What is the balance in the Allowance for Uncollectible Accounts after the above entry is made? $____________

1c. What is the amount of the Net Accounts Receivable on the balance sheet? $ ____________

2. The balance in the accounts receivable account is $984,000. An aging analysis on June 30 of the accounts receivable of James Corporation indicates uncollectible accounts of $43,000. Give the entry to record uncollectible accounts expense under each of the following independent assumptions: Assumption 1

2a. Give the journal entry to record the uncollectible accounts expense if the Allowance for Uncollectible Accounts has a credit balance of $9,000 before adjustment. DR ACCOUNT ____________________________________ AMOUNT $___________ CR ACCOUNT ____________________________________ AMOUNT $____________

2b. What is the balance in the Allowance for Uncollectible Accounts after the above entry is made? $ ____________

2c. What is the amount of the Net Accounts Receivable on the balance sheet? $ ____________

Assumption 2 2d.

Give the journal entry to record the uncollectible accounts expense if the Allowance for Uncollectible Accounts has a debit balance of $7,000 before adjustment. DR ACCOUNT ____________________________________ AMOUNT $________________ CR ACCOUNT ____________________________________ AMOUNT $________________ 2e. What is the balance in the Allowance for Uncollectible Accounts after the above entry is made? $ ____________

2f. What is the amount of the Net Accounts Receivable on the balance sheet? $ ____________

Answer 1

• All working forms part of the answer
• Question 1

Working

A	Net Sales	$                           27,70,000.00
B=A x 1%	Uncollectible Account Expense	$                                 27,700.00

Answers

---- 1 ‘a’

Transaction	Accounts title	Debit	Credit
1 'a'	Uncollectible Account Expense	$                                 27,700.00
	Allowance for Uncollectible Accounts		$             27,700.00
	(Bad debt expense recorded)

--- 1 ‘b’

Beginning Balance - (Debit) Credit	$                               (14,000.00)
Credited by Uncollectible Account expense	$                                 27,700.00
Ending Balance - (Debit) Credit	$                                 13,700.00

Hence, balance in Allowance account after entry is made = $ 13,700 Credit balance

---1 ‘c’

A	Accounts receivables balance	$                              6,87,000.00
B	Adjusted balance of Allowance of Uncollectible Accounts	$                                 13,700.00
C=A-B	Net Accounts Receivables on Balance Sheet	$                              6,73,300.00

• Question 2

Answers

--- 2 ‘a’

A	Unadjusted Allowance for Uncollectible account balance	$                                    9,000.00	Credit
B	Adjusted Balance required	$                                 43,000.00	Credit
C=B - A	Amount of Uncollectible Expense by which account is required to be credited	$                                 34,000.00

Transaction	Accounts title	Debit	Credit
2 'a'	Uncollectible Account Expense	$                                 34,000.00
	Allowance for Uncollectible Accounts		$             34,000.00
	(Bad debt expense recorded)

--- 2’b’

Beginning Balance - (Debit) Credit	$                                    9,000.00
Credited by Uncollectible Account expense	$                                 34,000.00
Ending Balance - (Debit) Credit	$                                 43,000.00

---- 2 ‘c’

A	Accounts receivables balance	$                              9,84,000.00
B	Adjusted balance of Allowance of Uncollectible Accounts	$                                 43,000.00
C=A-B	Net Accounts Receivables on Balance Sheet	$                              9,41,000.00

--- 2 ‘d’

A	Unadjusted Allowance for Uncollectible account balance	$                                    7,000.00	Debit
B	Adjusted Balance required	$                                 43,000.00	Credit
C = A + B	Amount of Uncollectible Expense by which account is required to be credited	$                                 50,000.00

Transaction	Accounts title	Debit	Credit
2 'd'	Uncollectible Account Expense	$                                 50,000.00
	Allowance for Uncollectible Accounts		$             50,000.00
	(Bad debt expense recorded)

--- 2 ‘e’

Beginning Balance - (Debit) Credit	$                                 (7,000.00)
Credited by Uncollectible Account expense	$                                 50,000.00
Ending Balance - (Debit) Credit	$                                 43,000.00

--- 2 ‘f’

A	Accounts receivables balance	$                              9,84,000.00
B	Adjusted balance of Allowance of Uncollectible Accounts	$                                 43,000.00
C=A-B	Net Accounts Receivables on Balance Sheet	$                              9,41,000.00