Problem D (20 points) FILL-IN-THE-BLANK-PRINCIPLES AND TERMINOLOGY- INSTRUCTIONS

Question

Problem D (20 points) FILL-IN-THE-BLANK-PRINCIPLES AND TERMINOLOGY- INSTRUCTIONS: Answer the following questions or complete the statements by writing the app amounts in the Answers column. ropriate words or For Scoring 0. Answers 0. The party purchasing a company's receivables is called a(n) 1. Allowance for Doubtful Accounts has a credit balance of $3,000 at factor the end of the year, before adjustments. Sales for the year amounted to $1,950,000, and sales returns and allowances amounted to $50,000. uncollectible accounts expense is estimated at 1% of net sales, the amount of the appropriate adjusting entry will be... 2. I f, instead of a percentage of net sales, the adjusting entry in Question 1 is based on an analysis of receivables that indicates doubtful accounts of $10,500, the amount of the adjustment will be 2. Allowance for Doubtful Accounts has a debit balance of $500 at the end of the year, before adjustment. If an analysis of receivables indicates doubtful accounts of $9,000, the amount of the appropriate adjusting entry will be The maturity value of a $75,000, 180-day, 4% note receivable is 3. 3. 4. 4. 5. In writing off an uncollectible account by the direct write-off method the account credited is 5 At the end of the fiscal year, after the accounts are closed, Accounts Receivable has a balance of $900,000, and Allowance for Doubtful Accounts has a balance of $75,000. What is the expected net realizable value of the receivables? 6. 6. 7. Where on the balance sheet would receivables that are expected to be 8. Allowance for Doubtful Accounts is listed on the appropriate financial 9. Notes receivable expected to be collected in 1 ½ years are listed on the realized in cash within one year be reported? statement in the subsection tited 8. financial statements in the subsection titled 9 s are the receivabies

Explanation / Answer

1. Allowance for Doubtful Accounts has a credit balance of $3,000 at the end of the year, before adjustments. Sales for the year amounted to $1,950,000, and sales returns and allowances amounted to $50,000. If uncollectible accounts expense is estimated at 1% of net sales, the amount of the appropriate adjusting entry will be Bad Debt Expense would be (1,950,000 - 50,000) x 1% = 19,000 Journal entry Bad Debt Expense $19,000.00 Allowance for Doubtful Accounts $19,000.00 2. If, instead of a percentage of net sales, the adjusting entry in Question 1 is based on an analysis of receivables that indicates doubtful accounts of $10,500, the amount of the adjustment will be Journal entry Bad Debt Expense ($10,500 - $3000) $7,500.00 Allowance for Doubtful Accounts $7,500.00 3. Allowancefor Doubtful Accounts has a debit balance of $500 at the end of the year, before adjustment. If an analysis of receivables indicates doubtful accounts of $9,000, the amount of the appropriate adjusting entry will be Bad Debt Expense ($9,000 + $500) $9,500.00 Allowance for Doubtful Accounts $9,500.00 4.The maturity value of a $75,000, 180-day, 4% note receivable is $76,500.00 $75000 + (75000 x 4%/360 x 180 days) 5.In writing off an uncollectible account by the direct write-off method, the account credited is Accounts Receivables 6.At the end of the fiscal year, after the accounts are closed, Accounts Receivable has a balance of $900,000, and Allowance for Doubtful Accounts has a balance of $75,000. What is the expected net realizable value of the receivables? NRV = $900000- 75000 $825,000.00 7.Where on the balance sheet would receivables that are expected to be realized in cash within one year be reported? Current Assets 8.Allowance for Doubtful Accounts is listed on the appropriate financial statement in the subsection titled Contra-asset account and is subtracted from Accounts Receivable under current assets on the balance sheet 9.Notes receivable expected to be collected in 1 ½ years are listed on the financial statements in the subsection titled Non Current Assets

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