11th Edition

ISBN: 9780133856781

Author: Tracie L. Miller-Nobles, Brenda L. Mattison, Ella Mae Matsumura

Publisher: PEARSON

Concept explainers

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by t…

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable ari…

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Textbook Question

Chapter 9, Problem 9.2DC

Decision Case 9-2

Pauline’s Pottery has always used the direct write-off method to account for uncollectibles. The company’s revenues, bad debt write-offs, and year-end receivables for the most recent year follow:

Year	Revenues	Write-offs	Receivables at Year-end
2018	$150,000	$3,900	$14,000

The business is applying for a bank loan, and the loan officer requires figures based on the allowance method of accounting for bad debts. In the past, bad debts have run about 4% of revenues.

Requirements

Pauline must give the banker the following information:

How much more or less would net income be for 2018 if Pauline’s Pottery were to use the allowance method for bad debts? Assume Pauline uses the percent-of-sales method.
How much of the receivables balance at the end of 2018 does Pauline’s Pottery actually expect to collect? (Disregard beginning account balances for the purpose of this question.)
Explain why net income is more or less using the allowance method versus the direct write-off method for uncollectibles.

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Chapter 9, Problem 9.1DC

Chapter 9, Problem 9.1FC

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question: Record the journal entries for the bad debt expense and $50 write off from the following: A company is getting ready to publish their annual financial statements. They have the following beginning balances: Beginning balance for gross accounts receivable (A) $2,000 beginning balance for Allowance for doubtful accounts (XA) $300 They make $10,000 in credit sales in the current period. Assume that 1% of credit sales are typically not collectible. If the income statement method is used, what are the reported (a.) bad debt expense and (b.) ending balance for the allowance for doubtful accounts? please include classification of accounts and label debits and credits.

1. Kinney Corporation estimates its uncollectible accounts as a percentage of its credit sales. The rate it uses is 3% and in 2018, its credit sales were $1,500,000. Required: a. Prepare journal entries to record the bad debts expense for the year. b. If Allowance for an uncollectible account has a credit balance of $60,000 before entries in (a) above, show how Accounts Receivable will be presented in the Balance Sheet of Kinney Corporation.

3. Grump Computer has credit sales of $400,000 in 2023 and a debit balance of $300 in the Allowance for Doubtful Accounts at year end. As of December 31, 2023, $120,000 of accounts receivable remain uncollected. The credit manager of Grump prepared an aging schedule of accounts receivable and estimates that $5,200 will prove to be uncollectible. On March 4, 2024 the credit manager authorizes a write-off of the $1,000 balance owed by A. Shard. Required (a) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2023. (b) Show the statement of financial position presentation of accounts receivable on December 31, 2023: (c) On March 4, before the write-off, assume the balance of Accounts Receivable account is $160,000 and the balance of Allowance for Doubtful Accounts is a credit of $4,000. Make the appropriate entry to record the write-off of the Shard account. Also show the statement of financial position presentation of accounts receivable before and after…

Chapter 9 Solutions

Horngren's Accounting (11th Edition)

Ch. 9 - 1. With good internal controls, the person who...Ch. 9 - Prob. 2QC Ch. 9 - Which of the following is a limitation of the...Ch. 9 - 3. The entry to record a write-off of an...Ch. 9 - Brickman Company uses the allowance method to...Ch. 9 - Brickman’s ending balance of accounts Receivable...Ch. 9 - At December 31 year-end, Crain Company has an...Ch. 9 - Using the data in the preceding question, what...Ch. 9 - At year-end, Schultz Company has cash of $11,600,...Ch. 9 - Using the data in the preceding question, assume...

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