Questions to practice Joumalize entries related to accounts receivable (LO2) E8-1 Presented below are selected transactions of Federer AG. Federer sells in large quan- tities to other companies and also sells its product in a small retail outlet. March 1 Sold merchandise on account to Lynda Co. for CHF3,800, terms 2/10, 1/30. 3 Lynda Co. returned merchandise worth CHF600 to Federer. 9 Federer collected the amount due from Lynda Co. from the March 1 sale. 15 Federer sold merchandise for CHF200 in its retail outlet. The customer used his Federer credit card. 31 Federer added 1.5% monthly interest to the customer's credit card balance. Instructions: : Prepare journal entries for the transactions (d) Assume the same facts as in (e), except that there is a 3,000 debit balance in Allow- ance for Doubtful Accounts. What amount of bad debt expense will Hamilton record? (e) What is the weakness of the direct write-off method of reporting bad debt expense? Compute bad debt amounts (LO 3) P8-2A Information related to Hamilton plc for 2017 is summarized below. Total credit sales 2,500,000 Accounts receivable at December 31 970,000 Bad debts written off 66,000 Instructions (a) What amount of bad debt expense will Hamilton report if it uses the direct write-off method of accounting for bad debts? (b) Assume that Hamilton estimates its bad debt expense to be 3% of credit sales. What amount of bad debt expense will Hamilton record if it has an Allowance for Doubtful Accounts credit balance of 4,000? (C) Assume that Hamilton estimates its bad debt expense based on 7% of accounts receiv- able. What amount of bad debt expense will Hamilton record if it has an Allowance for Doubtful Accounts credit balance of 3,000? BE8-8 Presented below are two independent transactions. Prepare entries to dispose of (a) Fiesta Restaurant accepted a Visa card in payment of a 175 lunch bill. The bank accounts receivable. charges a 4% fee. What entry should Fiesta make? (L04) (b) St. Pierre AG sold its accounts receivable of 70,000. What entry should St. Pierre make, given a service charge of 3% on the amount of receivables sold? P8-3A Presented below is an aging schedule for Sycamore AG. Journalize entries to record transactions related to bad debts. (LO3) Worksheet.xls Duter View Per Layout Form PER A B Customer 4 Anders S Blake 6 Cyrs 7 De Jong 8 Others C D E Number of Days Past Due Not Total Yet Due 1-30 31-60 61-90 Over 90 28,000 12,000 16,000 40,000 40,000 57,000 16,000 6,000 35,000 34,000 34,000 132,000 96,000 16,000 14,000 6,000 291,000 152,000 34,000 30,000 35,000 40,000 10 Estimated percentage uncollectible Total estimated bad debts 2% 6% 10% 25% 60% 40,830 3,040 2,040 3,000 8,750 24,000 11 12 (a) Bad debt expense 31,630 At December 31, 2017, the unadjusted balance in Allowance for Doubtful Accounts is a credit of 9,200 Instructions (a) Journalize and post the adjusting entry for bad debts at December 31, 2017 (b) Journalize and post to the allowance account the following events and transactions in the year 2018 (1) On March 31, a 1,000 customer balance originating in 2017 is judged uncollectible. (2) On May 31, a check for 1,000 is received from the customer whose account was written off as uncollectible on March 31. (e) Journalize the adjusting entry for bad debts on December 31, 2018, assuming that the unadjusted balance in Allowance for Doubtful Accounts is a debit of 1.100 and the aging schedule indicates that total estimated bad debts will be 31,600. ( Bad debt expense 32,700 Questions to practice Joumalize entries related to accounts receivable (LO2) E8-1 Presented below are selected transactions of Federer AG. Federer sells in large quan- tities to other companies and also sells its product in a small retail outlet. March 1 Sold merchandise on account to Lynda Co. for CHF3,800, terms 2/10, 1/30. 3 Lynda Co. returned merchandise worth CHF600 to Federer. 9 Federer collected the amount due from Lynda Co. from the March 1 sale. 15 Federer sold merchandise for CHF200 in its retail outlet. The customer used his Federer credit card. 31 Federer added 1.5% monthly interest to the customer's credit card balance. Instructions: : Prepare journal entries for the transactions (d) Assume the same facts as in (e), except that there is a 3,000 debit balance in Allow- ance for Doubtful Accounts. What amount of bad debt expense will Hamilton record? (e) What is the weakness of the direct write-off method of reporting bad debt expense? Compute bad debt amounts (LO 3) P8-2A Information related to Hamilton plc for 2017 is summarized below. Total credit sales 2,500,000 Accounts receivable at December 31 970,000 Bad debts written off 66,000 Instructions (a) What amount of bad debt expense will Hamilton report if it uses the direct write-off method of accounting for bad debts? (b) Assume that Hamilton estimates its bad debt expense to be 3% of credit sales. What amount of bad debt expense will Hamilton record if it has an Allowance for Doubtful Accounts credit balance of 4,000? (C) Assume that Hamilton estimates its bad debt expense based on 7% of accounts receiv- able. What amount of bad debt expense will Hamilton record if it has an Allowance for Doubtful Accounts credit balance of 3,000? BE8-8 Presented below are two independent transactions. Prepare entries to dispose of (a) Fiesta Restaurant accepted a Visa card in payment of a 175 lunch bill. The bank accounts receivable. charges a 4% fee. What entry should Fiesta make? (L04) (b) St. Pierre AG sold its accounts receivable of 70,000. What entry should St. Pierre make, given a service charge of 3% on the amount of receivables sold? P8-3A Presented below is an aging schedule for Sycamore AG. Journalize entries to record transactions related to bad debts. (LO3) Worksheet.xls Duter View Per Layout Form PER A B Customer 4 Anders S Blake 6 Cyrs 7 De Jong 8 Others C D E Number of Days Past Due Not Total Yet Due 1-30 31-60 61-90 Over 90 28,000 12,000 16,000 40,000 40,000 57,000 16,000 6,000 35,000 34,000 34,000 132,000 96,000 16,000 14,000 6,000 291,000 152,000 34,000 30,000 35,000 40,000 10 Estimated percentage uncollectible Total estimated bad debts 2% 6% 10% 25% 60% 40,830 3,040 2,040 3,000 8,750 24,000 11 12 (a) Bad debt expense 31,630 At December 31, 2017, the unadjusted balance in Allowance for Doubtful Accounts is a credit of 9,200 Instructions (a) Journalize and post the adjusting entry for bad debts at December 31, 2017 (b) Journalize and post to the allowance account the following events and transactions in the year 2018 (1) On March 31, a 1,000 customer balance originating in 2017 is judged uncollectible. (2) On May 31, a check for 1,000 is received from the customer whose account was written off as uncollectible on March 31. (e) Journalize the adjusting entry for bad debts on December 31, 2018, assuming that the unadjusted balance in Allowance for Doubtful Accounts is a debit of 1.100 and the aging schedule indicates that total estimated bad debts will be 31,600. ( Bad debt expense 32,700