Problem 7-2 Presented below are a series of unrelated situations. Answer the que
ID: 2417207 • Letter: P
Question
Problem 7-2 Presented below are a series of unrelated situations. Answer the questions relating to each of the five independent situations as requested. 1. Halen Company’s unadjusted trial balance at December 31, 2014, included the following accounts. Debit Credit Allowance for doubtful accounts $4,660 Net sales $1,232,000 Halen Company estimates its bad debt expense to be 2.0% of net sales. Determine its bad debt expense for 2014. Bad debt expense for 2014 $ 2. An analysis and aging of Stuart Corp. accounts receivable at December 31, 2014, disclosed the following. Amounts estimated to be uncollectible $ 180,500 Accounts receivable 1,761,000 Allowance for doubtful accounts (per books) 127,600 What is the net realizable value of Stuart’s receivables at December 31, 2014? The net realizable value $ 3. Shore Co. provides for doubtful accounts based on 3% of credit sales. The following data are available for 2014. Credit sales during 2014 $2,447,500 Allowance for doubtful accounts 1/1/14 18,700 Collection of accounts written off in prior years (customer credit was reestablished) 5,800 Customer accounts written off as uncollectible during 2014 35,300 What is the balance in Allowance for Doubtful Accounts at December 31, 2014? The balance in Allowance for Doubtful Accounts $ 4. At the end of its first year of operations, December 31, 2014, Darden Inc. reported the following information. Accounts receivable, net of allowance for doubtful accounts $961,400 Customer accounts written off as uncollectible during 2014 22,000 Bad debt expense for 2014 80,100 What should be the balance in accounts receivable at December 31, 2014, before subtracting the allowance for doubtful accounts? Accounts receivable, before deducting allowance for doubtful accounts $ 5. The following accounts were taken from Bullock Inc.’s trial balance at December 31, 2014. Debit Credit Net credit sales $740,300 Allowance for doubtful accounts $10,100 Accounts receivable 312,000 If doubtful accounts are 3% of accounts receivable, determine the bad debt expense to be reported for 2014. The bad debt expense, as adjusted $
Explanation / Answer
1. Amount of bad debt for 2014 is 2% of 1,232,000 = 24,640
2. Net realisable amount collected= 1,761,00. - 180,500 - 127,600 = 1452900
3. Balance as on 31.12.2014 =.$ (2447500*3%) - 18700 - 35,300 = 19425
4. Balance before any deduction = $961,400 + 22,000 + 80,100 = $1,063,500