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Chapter 9: Receivables Problem 1 At the end of the current year a companys accounts receivable balance is as follows: Estimated Uncollectible Percentage Not past

Chapter 9: Receivables

Problem 1

At the end of the current year a companys accounts receivable balance is as follows:

Estimated Uncollectible

Percentage

Not past due $ 85,000 1.95%

1-30 days past due 38,500 3.6%

31-60 days past due 29,900 9.5%

Over 60 days past due 9,480 40.0%

The companys Allowance for Doubtful Accounts has a balance, before the year-end adjustment, of $855 Debit.

1. Prepare a schedule computing the total estimated uncollectible accounts receivable.

2. What is the adjusting entry that should be made at the end of the year?

3. If a customer who owed $1,480 declared bankruptcy on January 31 of the next year, what would be the entry to write off the account?

4. What would be the entry for #2 and #3 if the direct write off method had been used?

Problem 2

1. Determine the maturity date, interest and the maturity value for each of the following notes.

Note 1--- $10,000, 9%, 4-month note dated April 1, 2018.

Note 2--- $12,000, 12%, 85-day note, dated September 18, 2018.

2. Assume the company prepares financial statements as of June 30, 2018. Prepare any adjusting entry that might be required for Note 1 as of June 30. If no entry would be required then write no entry required.

3. Assume the note dated September 18 was received when your customer (I. Cantpay) was granted an extension on his past due accounts receivable. Prepare the journal entry that would be made on September 18.

4. Prepare the journal entry required at the date of maturity if the note that originated on September 18 was dishonored at maturity.

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