Question

1. The Dent Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 2% of net credit sales will eventually be uncollectible. Net credit sales for ’17 totaled $500,000.

Instructions

(a)   Prepare the entry to record the estimated bad debts expense for 2017

(b)   Record the following events in 2017.

        Aug.   10       Determined that the account of Kim Lake for $1,000 is uncollectible.

        Sept.   12       Determined that the account of Joe Yates for $4,000 is uncollectible.

        Oct.    10       Received a check for $1000 as payment on account from Kim Lake, whose account had previously been written off as uncollectible.

(c)   What is the balance of Allowance for Doubtful Accounts at December 31, 2017?

2. Elder Company uses the allowance method for estimating uncollectible accounts. Net credit sales totaled $225,000. Elder estimated that 8% will be uncollectible.

Prepare journal entries to record the following transactions:

a. Prepare the entry to record the bad debt expense for the year.

b. January 5:   Sold merchandise to Mary Benes for $1,000, terms n/15.

c. April 15:    Received $200 from Mary Benes on account.

d. August 21: Wrote off as uncollectible the balance of the Mary Benes account when she declared bankruptcy.

e. October 5:   Unexpectedly received a check for $250 from Mary Benes

3. Prepare the necessary journal entry for the following transaction.

Carlson Company sold $500,000 of its accounts receivables to a factor. The factor charges a 4% fee.

4. A customer signed a 1-year, 6% $5000 note receivable for purchases made at Madison Company. Prepare the entry to record the purchase. Prepare the entry to retire the note.

5. Baylee Company issued a note to a customer for merchandise purchased. It was a 45 day, $5000 note @ 10%. On day, 30 financial statements were prepared. Record the following entries:

a. The issuing of the note

b. The accrual of interest before financial statement preparation

c. The retirement of the note.

6. Keaubie Company has receivables totaling $433,000. They use an Aging of Receivables Report to estimate what will be uncollectible. In addition to receivables, they have the following current assets: Cash $1,000,000; Merchandise Inventory: $350,000; Prepaid Insurance: $3000; Supplies: $5000.

Complete the Aging of Receivables Report to determine uncollectible amount. Record the transaction.

b. Prepare a Current Assets section of a balance sheet and prepare the entry to record        the estimated uncollectible accounts

Aging of Receivables Report
Amount of Receivable	$185,500	$98,500	$67,000	$60,000	$22,000
Days Owed	0-30	31-60	61-90	91-120	Over 120
Percent Uncollectible	1.8%	6.5%	11%	29%	51%
Amount Uncollectible
Total Estimated Uncollectible:

Answer 1