Instructions: Complete solution/explanation

1.Faith company provided the following information relating to current operations:

Accounts Receivable, January 1 - 4,000,000

Accounts receivable collected - 8,600,000

Cash sales - 2,500,000

Inventory, January 1 - 4,800,000

Inventory, December 31 - 4,200,000

Purchases - 8,000,000

Gross Margin on sales - 5,400,000

What amount should be reported as accounts receivable on December 31?

2.When examining the accounts receivable of Boss company, it is ascertained that balances relating to both receivables and payables are included in the single controlling account called "receivables control" with a debit balance of 4,850,000. An analysis of the makeup of this account consist of the following:

Accounts Receivable - customers - 7,500,000

Trade accounts receivables - officers - 600,000

Debit balance creditors - 300,000

Post-dated checks from customers - 400,000

Subscription receivable - 800,000

Accounts payable for merchandise - 4,500,000

Credit balance in customers accounts - 200,000

Cash received in advance from customers - 100,000

Expected bad debts - 150,000

After analysis of the aged accounts receivable, it is determined that the allowance for doubtful accounts should be 300,000.

What is the net realizable value of accounts receivable?

3.At the beginning of the year, Sandra company had a credit balance of 260,000 in the allowance for uncollectible accounts. Based on past experience, 3% of credit sales would be uncollectible

During the current year, the entity wrote of 325,000 uncollectible accounts. Credit sales for the year totaled 8,000,000.

What amount should be reported as an allowance for uncollectible accounts at year-end?

4.Buitre company used allowance method of accounting for doubtful accounts. The following summary schedule was prepared from an aging of accounts receivable outstanding on December 31.

No of days outstanding of collection - Amount - Probability

0-30 days- 10,000,000 - 98%

31-60 days- 4,000,000 - 90%

Over 60 days- 2,000,000 - 80%

The following additional information is available for the current year:

Net credit sales for the year - 80,000,000

Allowance for doubtful accounts: Balance January 1 - 900,000 (cr)

Balance before adjustment, December 31 - 40,000 (dr)

The entity based the estimate of doubtful accounts on aging of accounts receivable.

What amount should be recognize as doubtful expense for the current year?