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Accounting Receivable Accounting

This document provides examples of calculating bad debt expense based on accounts receivable balances and estimated uncollectible amounts. It shows how to calculate bad debt expense when given net credit sales and the allowance for doubtful accounts balance. It also includes sample accounting questions and answers related to recording bad debt expense adjustments.

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846 views

Accounting Receivable Accounting

This document provides examples of calculating bad debt expense based on accounts receivable balances and estimated uncollectible amounts. It shows how to calculate bad debt expense when given net credit sales and the allowance for doubtful accounts balance. It also includes sample accounting questions and answers related to recording bad debt expense adjustments.

Uploaded by

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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Accounting for Receivables

Tutorial-5

Exersise-6

Compute bad debt expense based on the following information:

(a) RLF Company estimates that 2% of net credit sales will become
uncollectible. Sales revenue are $600,000, sales returns and
allowances are $30,000, and the allowance for doubtful accounts has a
$6,000 credit balance.

(b) RLF Company estimates that 10% of accounts receivable will become
uncollectible. Accounts receivable are $100,000 at the end of the year,
and the allowance for doubtful accounts has a $500 debit balance.

Answer

(a) Bad debt expense = $11400 { ($600000-$30000) x .02}


(b) Bad debt expense = $10500 { ($100000 x .10) + $500}

30. Syfy Company on July 15 sells merchandise on account to Eureka Co.


for $5,000, terms 2/10, n/30. On July 20 Eureka Co. returns merchandise
worth $2,000 to Syfy Company. On July 24 payment is received from
Eureka Co. for the balance due. What is the amount of cash received?
a. $2,900
b. $2,940
c. $3,000
d. $5,000
Answer.b
36. An aging of a company's accounts receivable indicates that $14,000
are estimated to be uncollectible. If Allowance for Doubtful
Accounts has a $1100 credit balance, the adjustment to record bad
debts for the period will require a
a. debit to Bad Debts Expense for $14,000.
b. debit to Allowance for Doubtful Accounts for $12,900.
c. debit to Bad Debts Expense for $12,900.
d. credit to Allowance for Doubtful Accounts for $14,000
Answer. C

47.An aging of a company's accounts receivable indicates that $3,000 are


estimated to be uncollectible. If Allowance for Doubtful Accounts has a $800
debit balance, the adjustment to record bad debts for the period will require a
a. debit to Bad Debts Expense for $2,200.
b. debit to Bad Debts Expense for $3,000.
c. debit to Bad Debts Expense for $3,800.
d. credit to Allowance for Doubtful Accounts for $800
Answer. C
50.Kill Corporation's unadjusted trial balance includes the following
balances (assume normal balances):

Accounts Receivable $ 850,000

Allowance for Doubtful Accounts 15,000


Bad debts are estimated to be 6% of outstanding receivables. What amount
of bad debt expense will the company record?
a. $15000
b. $36000
c. $50100
d. $5100 Answer.b

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