Question
98. In 2008, Carpenter Company had net credit sales of 1,125,000. On January 1, 2008, Allowance for Doubtful Accounts had a credit balance of $27,000.
98. In 2008, Carpenter Company had net credit sales of 1,125,000. On January 1, 2008, Allowance for Doubtful Accounts had a credit balance of $27,000. During 2008, $45,000 of uncollectible accounts receivable were written off. Past experience indicates that the allowance should be 10% of the balance in receivables (percentage of receivables basis). If the accounts receivable balance at December 31 was $300,000, what is the required adjustment to the Allowance for Doubtful Accounts at December 31, 2008?
a. $30,000
b. $112,500
c. $48,000
d. $45,000
Use the following information for questions 99100.
12/31/07
Accounts receivable $525,000
Allowance (45,000)
Cash realizable value $480,000
During 2008, sales on account were $145,000 and collections on account were $86,000. Also during 2008, the company wrote off $8,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $54,000.
99. The change in the cash realizable value from the balance at 12/31/07 to 12/31/08 was a
a. $50,000 increase.
b. $59,000 increase.
c. $42,000 increase.
d. $51,000 increase.
100. Bad debts expense for 2008 is
a. $17,000.
b. $9,000.
c. $54,000
d. $1,000.
101. During 2008, Carbondale Inc. had sales on account of $132,000, cash sales of $54,000, and collections on account of $84,000. In addition, they collected $1,450 which had been written off as uncollectible in 2007. As a result of these transactions, the change in the accounts receivable balance indicates a
a. $100,550 increase.
b. $48,000 increase.
c. $46,550 increase.
d. $102,000 increase.
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