Problem 5-1

a. Credit sales (75% x 5,000,000) 3,750,000.00

Doubtful accounts (3,750,000) 75,000.00

Doubtful accounts 75,000.00

Allowance for doubtful accounts 75,000.00

b. Doubtful accounts (1% x 5,000,000) 50,000.00

Allowance for doubtful accounts 50,000.00

c. Required allowance 80,000.00

Less: Credit balance of allowance 20,000.00
Doubtful account expense 60,000.00

Doubtful accounts 60,000.00

Allowance for doubtful accounts 60,000.00

d. Required allowance (10% x 500,000) 50,000.00

Less: Credit balance of allowance 20,000.00
Doubtful account expense 30,000.00

Doubtful accounts 30,000.00

Allowance for doubtful accounts 30,000.00

Problem 5-2

Requirement a

1 Accounts receivable 7,000,000.00

Sales 7,000,000.00

2 Cash 2,450,000.00
Sales Discount 49,000.00
Accounts receivable (2,450,000 / 98%) 2,499,000.00

3 Cash 3,900,000.00
Accounts receivable 3,900,000.00

4 Allowance for doubtful accounts 30,000.00

Accounts receivable 30,000.00

5 Accounts receivable 10,000.00

Allowance for doubtful accounts 10,000.00
 Cash 10,000.00
Accounts receivable 10,000.00

6 Sales return 70,000.00

Accounts receivable 70,000.00

Requirement b

1 Doubtfoul accounts
Allowance for doubtful accounts