Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $4,375,000; Allowance for Doubtful Accounts has a debit balance of $21,300; and sales for the year tota $102,480,000. Bad debt expense is estimated at 1/4 of 1% of sales. a. Determine the amount of the adjusting entry for uncollectible accounts. x b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable. Feedback Check My Won a. Remember that since accounts receivable are created by credit sales, uncollectible accounts can be estimated as a percent of credit sales. If the portion of credit sales to sales is relatively constant, the percent may be applied to total sales. b. Under the percent of sales method, the amount of the adjustment is the amount estimated for Bad Debt Expense. c. Remember that net realizable value is the amount that is expected to be collected or realized. Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $4,375,000; Allowance for Doubtful Accounts has a debit balance of $21,300; and sales for the year total $102,480,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $205,000 a. Determine the amount of the adjusting entry for uncollectible accounts. b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable. Note Receivable Prefix Supply Company received a 120-day, 8% note for $450,000, dated April 9 from a customer on account. Assume 360 days in a year. a. Determine the due date of the note. b. Determine the maturity value of the note. c. Journalize the entry to record the receipt of the payment of the note at maturity. If an amount box does not require an entry, leave it blank. Aug. 7 6% 4 Determine Due Date and Interest on Notes Determine the due date and the amount of interest due at maturity on the following notes: Date of Note Face Amount Interest Rate Term of Note a. January 5 $90,000 120 days b February 15 21,000 30 days C. May 19 68,000 45 days d. August 20 34,400 5 90 days e. October 19 50,000 7 90 days Assume a leap year in which February has 29 days. Assume 360 days in a year when computing the interest. Note Due Date Interest (a) 8 (b) (d) Entries for Receipt and Dishonor of Note Receivable Journalize the following transactions of Trapper Jon's Productions. Assume 360 days in a year. If an amount box does not require an entry, leave it blank. June 23. Received a $48,000, 90-day, 8% note dated June 23 from Radon Express Co. on account. Sept. 21. The note is dishonored by Radon Express Co. Received the amount due on the dishonored note plus interest for 30 days at 10% on the total amount charged to Radon Express Co. on September 21. Oct. 21. June 23 Sept. 21 Oct. 21 Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $4,375,000; Allowance for Doubtful Accounts has a debit balance of $21,300; and sales for the year tota $102,480,000. Bad debt expense is estimated at 1/4 of 1% of sales. a. Determine the amount of the adjusting entry for uncollectible accounts. x b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable. Feedback Check My Won a. Remember that since accounts receivable are created by credit sales, uncollectible accounts can be estimated as a percent of credit sales. If the portion of credit sales to sales is relatively constant, the percent may be applied to total sales. b. Under the percent of sales method, the amount of the adjustment is the amount estimated for Bad Debt Expense. c. Remember that net realizable value is the amount that is expected to be collected or realized. Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $4,375,000; Allowance for Doubtful Accounts has a debit balance of $21,300; and sales for the year total $102,480,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $205,000 a. Determine the amount of the adjusting entry for uncollectible accounts. b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable. Note Receivable Prefix Supply Company received a 120-day, 8% note for $450,000, dated April 9 from a customer on account. Assume 360 days in a year. a. Determine the due date of the note. b. Determine the maturity value of the note. c. Journalize the entry to record the receipt of the payment of the note at maturity. If an amount box does not require an entry, leave it blank. Aug. 7 6% 4 Determine Due Date and Interest on Notes Determine the due date and the amount of interest due at maturity on the following notes: Date of Note Face Amount Interest Rate Term of Note a. January 5 $90,000 120 days b February 15 21,000 30 days C. May 19 68,000 45 days d. August 20 34,400 5 90 days e. October 19 50,000 7 90 days Assume a leap year in which February has 29 days. Assume 360 days in a year when computing the interest. Note Due Date Interest (a) 8 (b) (d) Entries for Receipt and Dishonor of Note Receivable Journalize the following transactions of Trapper Jon's Productions. Assume 360 days in a year. If an amount box does not require an entry, leave it blank. June 23. Received a $48,000, 90-day, 8% note dated June 23 from Radon Express Co. on account. Sept. 21. The note is dishonored by Radon Express Co. Received the amount due on the dishonored note plus interest for 30 days at 10% on the total amount charged to Radon Express Co. on September 21. Oct. 21. June 23 Sept. 21 Oct. 21