Question

Use the following data for the next 4 questions, At the end of January, the unadjusted trial balance of Vemon, Inc., included the following accounts: Debit Credit $600,000 Sales (75% represent credit sales). Accounts Receivable Allowance for Doubtful Accounts $200,000 2,000 27. Refer to the above data. Vernon estimates bad debts expense to be 2% of credit sales. What is the amount of Bad Debts expense recognized in Vernon's income statement for January? 28. Refer to the above data. Vernon estimates bad debts expense to be 2% of credit sales. After the adjusting entry is made the net realizable value of Vernon's accounts receivable in the January 31 balance sheet is: 29. Refer to the above data. Vernon ages the accounts receivable and determines the estimated uncollectible portion to be 4% of gross accounts receivable. What is the amount of Bad Debts expense recognized in Vernon's income statement for January? 30. Refer to the above data. Vernon ages the accounts receivable and determines the estimated uncollectible portion to be 4% of gross accounts receivable. After the adjusting entry is made, the net realizable value of Veron's accounts receivable in the January 31 balance sheet is: FOROC230-31 @ @ @ @ @ @

Answer 1

27) Bad debt expense = 600000*75%*2% = 9000

28) Net realizable value = 200000-7000 = 193000

29) Bad debt expense = 200000*4%+2000 = 10000

30) Net realizable value = 200000-8000 = 192000