Chapter 9: Account Receivables

*Ex.1:
At year-end(December 31), Terner Company estimates its bad debts as 0.6% of its annual credit sales of
$858000. Terner records its Bad Debt Expense for that estimate. On the following February 1, Terner decides that
the $429 account of D. Fidel is uncollectible and writes its off as a bad debt. On June 5, Fidel unexpectedly pays
the amount previously written off. Prepare the entries of Terner to record these transactions and events of
December 31, Feb 1, June 5

* Ex . 2 :
At each calendar year-end, Rivka Supply Co. uses the percent of accounts receivable method to estimate bad
debts. On Dec31, 2013, it has outstanding accounts receivable of $ 139,500, and it estimates that 2% will be
uncollectible. Prepare the adjusting entry to record bad debts expense for year 2013 under the assumption that the
allowance for Doubtful Accounts has (a) a $2,371 credit balance before the adjustment and (b) a $487 debit
balance before the adjustment.
*Ex.3:
Palonna Co. estimates uncollectible accounts using the allowance method at Dec.31. It prepared the following
aging of receivables analysis.
Total Days past Due
0 1-30 31-60 61-90 Over 90
Account Receivable $95,000 $66,000 $15,000 6,000 3,000 5,000
Percent uncollectible 1% 2% 4% 7% 12%

a. Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted
balance in Allowance for Doubtful Accounts is a $300 debit.
c. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted
balance in Allowance for Doubtful Accounts is a $200 credit.

*Ex . 4:
Refer to the information in Ex. 3 to complete the following requirements.
a. Estimate the balance of the Allowance for Doubtful Accounts using 2% of total accounts receivable to
estimate uncollectible, instead of the aging of receivables method.
b. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted
balance in Allowance for Doubtful Accounts is a $300 debit.
c. Prepare the adjusting entry to record Bad Debts Expense using the estimate from part a. Assume the unadjusted
balance in Allowance for Doubtful Accounts is a $200 credit.

*Ex.5:
At Dec. 31,2013 Bowie Company reports the following results
Cash Sales……………$400,000
Credit Sales…………..$300,000
Account Receivable…..$ 65,000 debit
Allowance for D. Account…1000 debit
Required:
Prepare the adjusting entry to report Bad Debts under each of the following independent assumptions.
a. Bad Debts are estimated to be 2% of credit sales.
b. Bad Debts are estimated to be 1% of total sales.
c. Prepare the adjusting entry to record Bad Debt Expense assuming uncollectible are estimated to be 8%
of year end Account Receivables.
 *Ex.6 :
At Dec. 31,2013 , Vizaro Company reports the following results
Sales…………… $ 360,000 credit
Account Receivable….. $ 165,000 debit
Allowance for D. Account…1,200 debit
Required:
1- Prepare the adjusting entry at Dec. 31,2013, to record bad debt expense if the company estimates that 5%
of account receivable will be uncollectible.
2- Prepare the adjusting entry at Dec.31, 2013, to record bad debt expense if the company estimates that 2% of
sales will be uncollectible.
3- Show the balance sheet presentation of account receivable at Dec. 31,2013 under assumption (2) above.
4- On Jan. 20,2014, a $900 account receivable is written off as uncollectible. Prepare the journal entry to record
the write-off.
5- On March 15, 2014, $500 of the account that was written off on January 20, was collected. Prepare the
journal entries to record that recovery.
6- Repeat part (4) above assuming that the company uses the direct write-off method instead of the allowance
method in accounting for uncollectible account receivable.

*Ex.7:
At Dec. 31,2013 , Vizaro Company reports the following results
Cash Sales……………$2,184,700
Credit Sales…………..$ 3,720,000
Account Receivable…..$ 1,127,500 debit
Allowance for D. Account…29030 debit
Required:
1. Prepare the adjusting entry to report Bad Debts under each of the following independent assumptions.
a. Bad Debts are estimated to be 1.5% of credit sales.
b. Bad Debts are estimated to be 1% of total sales.
c. An aging analysis estimates that 3% of year- end accounts receivable are uncollectible.
2. Show how Account Receivable and Allowance for Doubtful Accounts appear on its Dec.31, 2013, balance
sheet given the facts in part 1a.
3. Show how Account Receivable and Allowance for Doubtful Accounts appear on its Dec.31, 2013, balance
sheet given the facts in part 1c.