1. In 2018, Sony Corporation had net credit sales of $1,250,000. On January 1, 2018, Allowance for Doubtful Accounts had a credit balance of $30,000. During 2018, $20,000 of uncollectible accounts receivable were written off. Past experience indicated that the allowance should be 10% of the balance in account receivables. If the accounts receivable balance at December 31 was $400,00, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2018?
2. Using the percentage -of-receivable method for recording bad debts expense, estimated uncollectible accounts are $23,000. If the balance of the Allowance for Doubtful Accounts is $2,000 debit before adjustment, what is the amount of bad expense for that period.
3. Samsung corporation receives $1000,000, 5%, 3-months note receivable. The maturity vale of this note receivable will be
Answer to Question 1:
Before Adjustments:
Balance of Allowance for Doubtful Accounts = Beginning Balance -
Write off
Balance of Allowance for Doubtful Accounts = $30,000 -
$20,000
Balance of Allowance for Doubtful Accounts = $10,000
Estimated Uncollectible = 10% * Accounts Receivable
Estimated Uncollectible = 10% * $400,000
Estimated Uncollectible = $40,000
Bad Debt Expense = Estimated Uncollectible - Unadjusted Credit
Balance of Allowance for Doubtful Accounts
Bad Debt Expense = $40,000 - $10,000
Bad Debt Expense = $30,000
Answer to Question 2:
Estimated Uncollectible = $23,000
Bad Debt Expense = Estimated Uncollectible + Unadjusted Debit
Balance of Allowance for Doubtful Accounts
Bad Debt Expense = $23,000 + $2,000
Bad Debt Expense = $25,000
Answer to Question 3:
Face Value of Note = $1,000,000
Interest Rate = 5%
Period = 3 months
Accrued Interest = Face Value of Note * Interest Rate *
Period
Accrued Interest = $1,000,000 * 5% * (3/12)
Accrued Interest = $12,500
Maturity Value = Face Value + Accrued Interest
Maturity Value = $1,000,000 + $12,500
Maturity Value = $1,012,500
1. In 2018, Sony Corporation had net credit sales of $1,250,000. On January 1, 2018, Allowance...
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