Fill-in-the-Blank Equations

1. Accounts receivable Allowance for doubtful accounts =
2. After the adjusting entry is recorded, Allowance for Doubtful Accounts should always have a balance.
3. Interest = Interest rate (Term/360 days)
4. = Face amount + Interest
5. Accounts receivable turnover = Sales/
6. Days sales in receivables = Average accounts receivable/

Exercises

1. ToolBox Co. sells a large piece of equipment to another company on November 6, 20Y5. ToolBox Co. receives a down payment of $1,000 on the date of sale and will receive a

$400 monthly payment on the 15th of every month, beginning in January of the following year, for five years. What type of receivable will ToolBox Co. record? Will the receivable be classified as current or noncurrent? ________________ _____________

2. Bon Firewood sells products to customers at a markup of its original cost. Customers typically pay on account, but large customers are allowed to receive the products and pay the amount owed within 30 days. What type of receivable will Bon Firewood record for these customers? How will the receivable be classified on the balancesheet?

___________________ _______________________

3. A small business records its bad debt expense when a customer is identified as being unable to pay the amount owed. Which method of accounting for uncollectible receivables does the business use? ___________________
4. Paper Supply Inc. accounts for its uncollectible receivables using the GAAP required method. Does Paper Supply Inc. use the direct write-off or allowance method to account for its uncollectible receivables? ________________
5. Kitchen Gadgets estimates its uncollectible accounts as a percentage of credit sales for the period. Which method of accounting for uncollectible receivables does the business use? ___________________
6. Prepare the journal entries to record the following transactions for Carolina Costumes using the direct write-off method:
   1. Received $1,450 from Dillon Berry and wrote off the remainder owed of $2,130 as uncollectible on September 12, 20Y5.
   2. On December 18, 20Y5, reinstated the entire account of Dillon Berry and received $2,130 cash as payment for the remaining amount owed.
7. Eddy Book Co. uses the allowance method to record uncollectible accounts receivable. The company had credit sales of $8,900,000 for 20Y5 and a balance of $2,200 in its Allowance for Doubtful Accounts before any adjusting entries. The company has a calendar year-end.
   1. Prepare the adjusting entry to record the Bad Debt Expense for 20Y5 if the company expects that % of credit sales will be uncollectible.
   2. What will the adjusted balance of Allowance for Doubtful Accounts be at year- end?
8. Camel Bookstore records uncollectible accounts receivable using the allowance method. The company had total sales of $15,600,000, 35% of which were credit sales. The company expects that % of credit sales will be uncollectible.
   1. Prepare the adjusting entry on December 31, 20Y5, to record the BadDebt Expense for the year.
   2. If the companys ending balance for Allowance for Doubtful Accounts was

$50,240, what was the balance before the adjusting entry?