Assigment 14

Challenge exercise 1
a. 31-Dec Debit Bad debt expense 2,400

Credit Allowance for doubtful account IDR 2,400
b. 1) 31-Dec Debit Bad debt expense 13,500

Credit Allowance for doubtful account 13,500
2) 31-Dec Debit Bad debt expense 16,500
c. 1) 31-Dec Debit Bad debt expense 10,125

2) 31-Dec Debit Bad debt expense 12,370
Challlenge exercise 2
a. Debit Cash 679,000 From 700,000 - 21,000

Debit Factoring Expense 21,000 From 3% * 700,000
Credit Account Receivable 700,000
a. Debit Cash 3,840 From 4,000-160

Debit Credit Card Expense 160 From 4% *4,000
Credit Sales 4,000
b. Why do companies sell receivable ?

= 1. because receivables may be the only reasonable source of cash
2. because the company want to avoid losses if customers don’t pay their bills , so they sell the receivables
3. because collecting receivables are time - consuming .
c. Why do companies accept national credit cards ?

= because by accepting national credit cards can improve cash flow & if use credit cards , the payment is paid immediately
From [1,400,000 (net sales)-50,000(sales returns & allowances)]* 1%
From[200,000 *10%] -3,500
From[1,400,000 (net sales) - 50,000( sales returns &allowances )] *0,75%
From [ 200,000 *6%] +370
m 700,000 - 21,000
m 3% * 700,000
l the receivables
e payment is paid immediately without debt.

P9.3A Journalize entries to record transactions related to bad debts
Presented below is an aging schedule for Halleran Company.
Number of Days Past Due
Customer Total Not yet Due 30-Jan 31-60 61-90

Anders $22,000 $10,000 $12,000
Blake 40,000 $40,000
Coulson 57,000 16,000 6,000 35,000
Deleon 34,000
Others 132,000 96,000 16,000 14,000
$285,000 $152,000 $32,000 $26,000 $35,000
Estimated
Percentage
Uncollectible 3% 6% 13% 25%
Total Estimated
Bad Debts $38,610 $4,560 $1,920 $3,380 $8,750
At December 31, 2020, the unadjusted balance in Allowance for Doutful Accounts is a credit of $12,000.
Instructions:
(a) Journalize and post the adjusting entry for bad debts at December 31, 2020.
(b) Journalize and post the allowance account the following events and transactions in the year 2021.
(1) On March 31, a $1,000 customer balance originating in 2020 is judged uncollectible.
(2) On May 31, a check for $1,000 is received from the customer whose account was written off as u
on March 31.
( c) Journalize the adjusting entry for bad debts on December 31, 2021, assuming that the unadjusted bal
the Allowance for Doubtful Accounts is a debit of $800 and the aging schedule indicates that total estim
debts will be $31,600.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
(a)
Dec. 31 Bad debt Expense
Allowance for doubtful accounts
Bad Debt Expense

Date Explanation Ref.
2020
Dec. 31 Adjusting
Allowance for Doubtful Accounts
Date Explanation Ref.
2020
Dec. 31 Balance
Dec.31 Adjusting
2021
Mar. 31
31-May
2021
(b) (1) Mar. 31 Allowance for doubtful account
Account receivable
(b) (2)
31-May Account receivable
Allowance for doubtful account
31-May Cash
Account receivable
(c) 2021
31-Dec Bad debt expense
After you have completed the requirements of P9.3A, consider these additional questions.
Answers are on the other tab in this file.
1. Suppose the amount uncollectible on March 31 is changed to $1,800 and no cash was received from cu
the write-off of accounts receivable. What would be the balance of the Allowance for Doubtful Accounts
2. Suppose the balance in the Allowance for Doubtful Accounts before adjustment was $2,100 debit. An a
that total estimated bad debts will be $38,000. What is the year-end adjustment for bad debts for 2020?
1 31-Mar Allowance for doubtful account

Account Receivable
Date Explanation
2020
Dec. 31 Balance
Dec.31 Adjusting
2021
Mar. 31
2 Dec.31 Bad debt expense

Over 90
34,000
6,000
$40,000
50%
$20,000
a credit of $12,000.
n the year 2021.
t was written off as uncollectible
at the unadjusted balance in

dicates that total estimated bad
n cells with a "?" .
26,610
26,610
Debit Credit Balance
26,610 26,610
Debit Credit Balance
12,000
26,610 38,610
1,000 37,610
1,000 36,610
1,000
1,000
1,000
1,000
1,000
1,000
32,400 From 31,600+800

32,400
was received from customer subsequent to

for Doubtful Accounts before adjustment?
as $2,100 debit. An aging schedule indicates
r bad debts for 2020?
1,800
1,800
Ref. Debit Credit Balance
12,000
26,610 38,610
1,800 36,810
40,100 From 38,000+2,100

40,100

Assigment 14

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Challenge exercise 1

a. 31-Dec Debit Bad debt expense 2,400

b. 1) 31-Dec Debit Bad debt expense 13,500

c. 1) 31-Dec Debit Bad debt expense 10,125

a. Debit Cash 679,000 From 700,000 - 21,000

a. Debit Cash 3,840 From 4,000-160

b. Why do companies sell receivable ?

c. Why do companies accept national credit cards ?

From[1,400,000 (net sales) - 50,000( sales returns &allowances )] *0,75%

From [ 200,000 *6%] +370

e payment is paid immediately without debt.

Number of Days Past Due

Customer Total Not yet Due 30-Jan 31-60 61-90

Bad Debt Expense

1 31-Mar Allowance for doubtful account

2 Dec.31 Bad debt expense

n the year 2021.

t was written off as uncollectible

at the unadjusted balance in

n cells with a "?" .

Debit Credit Balance

32,400 From 31,600+800

was received from customer subsequent to

Ref. Debit Credit Balance

40,100 From 38,000+2,100

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