Question

Chapter 8 Practice Problems Problem #9 - Analysis of Accounts Receivable Method At the end of the current year, Accounts Receivable has a balance of $6,000,000; Allowance for Doubtful Accounts has a credit balance of $50,000; and Net Sales for the year total $18,000,000. Using the Analysis of Accounts Receivable Method the balance for the Allowance for Doubtful Accounts is estimated as $125,000. 1) Calculate the dollar amount required to record the allowance amount. 2) Prepare the adjusting journal entry for the Allowance for Doubtful Accounts: Date Accounts Dr Cr 3) Calculate the Net Accounts Receivable Balance Problem #10 - Analysis of Accounts Receivable Method At the end of the current year, Accounts Receivable has a balance of $400,000; Allowance for Doubtful Accounts has a credit balance of $1,800; and Net Sales for the year total $6,000,000. Using the Analysis of Accounts Receivable Method the balance for the Allowance for Doubtful Accounts is estimated as $80,000. 1) Calculate the dollar amount required to record the allowance amount. 2) Prepare the adjusting journal entry for the Allowance for Doubtful Accounts: Date Accounts Dr 3) Calculate the Net Accounts Receivable Balance

Answer 1

	problem 9
	1)	125000-50000
		75000
	2)	Date	Accounts				Debit	Credit
		31-Dec	Bad debts expense				75,000
			allowance for Doubtful accounts					75,000
	3)	Net Account receivable balance
		Accounts receivable						6,000,000
		less Allowance for Doubtful accounts						-125,000
		Net Account receivable balance						5,875,000
	problem 10
	1)	80000-1800
		78200
	2)	Date	Accounts				Debit	Credit
		31-Dec	Bad debts expense				78,200
			allowance for Doubtful accounts					78,200
	3)	Net Account receivable balance
		Accounts receivable						400,000
		less Allowance for Doubtful accounts						-80,000
		Net Account receivable balance						320,000