Question

In: Accounting

98. In 2008, Carpenter Company had net credit sales of 1,125,000. On January 1, 2008, Allowance...

98. In 2008, Carpenter Company had net credit sales of 1,125,000. On January 1, 2008, Allowance for Doubtful Accounts had a credit balance of $27,000. During 2008, $45,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was $300,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2008?

a. $30,000

b. $112,500

c. $48,000

d. $45,000

Use the following information for questions 99–100.

12/31/07

Accounts receivable $525,000

Allowance (45,000)

Cash realizable value $480,000

During 2008, sales on account were $145,000 and collections on account were $86,000. Also during 2008, the company wrote off $8,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $54,000.

99. The change in the cash realizable value from the balance at 12/31/07 to 12/31/08 was a

a. $50,000 increase.

b. $59,000 increase.

c. $42,000 increase.

d. $51,000 increase.

100. Bad debts expense for 2008 is

a. $17,000.

b. $9,000.

c. $54,000

d. $1,000.

101. During 2008, Carbondale Inc. had sales on account of $132,000, cash sales of $54,000, and collections on account of $84,000. In addition, they collected $1,450 which had been written off as uncollectible in 2007. As a result of these transactions, the change in the accounts receivable balance indicates a

a. $100,550 increase.

b. $48,000 increase.

c. $46,550 increase.

d. $102,000 increase.

Expert Solution

98]	Required allowance = 300000*10% =	$ 30,000
	Balance in allowance account before adjustment = 45000-27000 =	$ 18,000	Debit
	Required adjustment = 30000+18000 =	$ 48,000
	Answer: Option [c]
99]	Accounts receivable end balance = 525000+145000-86000-8000 =	$ 5,76,000
	End balance in allowance account = 45000-8000 =	$ 37,000	Credit
	Cash realizable value at 12/31/08 = 576000-54000 =	$ 5,22,000
	Change in cash realizable value = 522000-480000 =	$ 42,000	Increase
	Answer: Option [c]
100]	Bad debts expense for 2008 = 54000-37000 =	$ 17,000
	Answer: Option [a]
101]	Increase in AR balance	$ 1,32,000
	Decrease in AR balance	$ 84,000
	Increase in AR balance	$ 48,000
	Answer: Option [b]

ekkarill92 answered 1 year ago

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