Problem 7-2 Presented below are a series of unrelated situations. Answer the que
ID: 2551606 • 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. Shamrock Company’s unadjusted trial balance at December 31, 2017, included the following accounts.
Shamrock Company estimates uncollectible accounts to be 6% of gross accounts receivable. Determine its bad debt expense for 2017
Bad debt expense for 2017: $
2. An analysis and aging of Bridgeport Corp. accounts receivable at December 31, 2017, disclosed the following.
What is the net realizable value of Bridgeport’s receivables at December 31, 2017?
The net realizable value: $
3. Indigo Co. provides for doubtful accounts based on 4% of gross accounts receivable, The following data are available for 2017.
What is the balance in Allowance for Doubtful Accounts at December 31, 2017?
4. At the end of its first year of operations, December 31, 2017, Sweet Inc. reported the following information.
The balance in Allowance for Doubtful Accounts: $
What should be the balance in accounts receivable at December 31, 2017, before subtracting the allowance for doubtful accounts?
Accounts receivable, before deducting allowance for doubtful accounts: $
DEBIT CREDIT
5. The following accounts were taken from Pharoah Inc.’s trial balance at December 31, 2017.
If doubtful accounts are 3% of accounts receivable, determine the bad debt expense to be reported for 2017.
Explanation / Answer
Answer of Part 1:
Uncollectible Accounts = Gross Accounts Receivable * 6%
Uncollectible Accounts = $53,600 *6%
Uncollectible Accounts = $3,216
Bad Debt Expense = Allowance for doubtful Debt + Uncollectible Accounts
Bad Debt Expense = $5,450 + $3,216
Bad Debt Expense = $8,666