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ACCOUNTS RECEIVABLE Problem 1: Contra-Revenues and Other Issues Record the following transactions: 1. Sold goods with a selling price of $1,000 and cost of $750 with terms FOB Shipping Point, 2/10, n/30. 2. Goods in #2 arrived at buyers. 3. Buyer in #1/#2 paid within the discount period. 4. Sold goods with a selling price of $500 and cost of $275 with terms FOB Destination 2/10,n/30. Goods were shipped immediately. 5. Goods in #4 arrived at buyers. 6. Goods in #4/#5 were returned. They were undamaged and in salable condition. 7. Sold goods with a selling price of $5800 and cost of $3,600 with terms FOB Destination 2/10,n/30. Goods were shipped immediately. 8. Goods in #7 arrived at buyers but arrived 2 days late negatively impacting the buyers manufacturing process. 9. Customer in #8 received a $500 credit on his purchase. Goods were shipped immediately. The customer complained.... a lot.

ACCOUNTS RECEIVABLE Problem 1: Contra-Revenues and Other Issues Record the following transactions: 1. Sold goods with a selling price of $1,000 and cost of $750 with terms FOB Shipping Point, 2/10, n/30. 2. Goods in #2 arrived at buyers. 3. Buyer in #1/#2 paid within the discount period. 4. Sold goods with a selling price of $500 and cost of $275 with terms FOB Destination 2/10,n/30. Goods were shipped immediately. 5. Goods in #4 arrived at buyers. 6. Goods in #4/#5 were returned. They were undamaged and in salable condition. 7. Sold goods with a selling price of $5800 and cost of $3,600 with terms FOB Destination 2/10,n/30. Goods were shipped immediately. 8. Goods in #7 arrived at buyers but arrived 2 days late negatively impacting the buyers manufacturing process. 9. Customer in #8 received a $500 credit on his purchase. Goods were shipped immediately. The customer complained.... a lot.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Part 1: Prepare Journal Entries

Part 2: Accounting for Bad Debts (Please complete the list below)

  • Prepare T-Accounts for A/R;  Allowance for Doubtful Accounts and Bad Debt Expense
    • Put beginning balances that are given in these accounts.
  • Record Journal Entries for Current Year Activity
    • Post the JEs Activity to T-accounts above. 
  • Prepare Adjusting Journal Entries for "a" and "b" based on the assumptions given in "a" and "b"
  • Indicate the following information that would appear on the financial statements under "a" and "b"
    • Accounts Receivable
    • Allowance for Doubtful Accounts
    • Net realizable A/R --- (just subtract the two above)
    • Bad Debt Expense

Thank you

ACCOUNTS RECEIVABLE Problem 1: Contra-Revenues and Other Issues Record the following transactions: 1. Sold goods with a selling price of $1,000 and cost of $750 with terms FOB Shipping Point, 2/10, n/30. Goods were shipped immediately. 2. Goods in #2 arrived at buyers. 3. Buyer in #1/#2 paid within the discount period. 4. Sold goods with a selling price of $500 and cost of $275 with terms FOB Destination 2/10,n/30. Goods were shipped immediately. 5. Goods in #4 arrived at buyers. 6. Goods in #4/#5 were returned. They were undamaged and in salable condition. 7. Sold goods with a selling price of $5800 and cost of $3,600 with terms FOB Destination 2/10,n/30. Goods were shipped immediately. 8. Goods in #7 arrived at buyers but arrived 2 days late negatively impacting the buyers manufacturing process. 9. Customer in #8 received a $500 credit on his purchase. The customer complained..... a lot. Problem 2: Accounting for Bad Debts: The following is selected account information and activity for the year ended 12/31/19: Beginning Account Balances 1/1/19 Accounts Receivable $60,000 1/1/19 Allowance for Doubtful Accounts $2,000 2019 Activity Sales on account - $800,000 Cash collections of $740,000 net of $12,000 in sales discounts Sales returns totaled $30,000 Sales allowances totaled $10,000 Accounts receivable written-off as uncollectible totaled $2,800 Required Use the information above to calculate bad debts expense under the two following mutually exclusive and independent assumptions: a. A review of 12/31/19 subsidiary accounts receivable indicated that $3,000 was estimated to be uncollectible. b. Bad debts are estimated to run at 0.5% of sales based on historical data adjusted for current credit granting and collection procedures. For each of the above (a., b.) mutually exclusive and independent assumptions: Prepare the appropriate adjusting journal entry. Indicate the financial statement presentation: Net Accounts Receivable for the year-ended 12/31/19. 2019 Bad Debts Expense
Transcribed Image Text:ACCOUNTS RECEIVABLE Problem 1: Contra-Revenues and Other Issues Record the following transactions: 1. Sold goods with a selling price of $1,000 and cost of $750 with terms FOB Shipping Point, 2/10, n/30. Goods were shipped immediately. 2. Goods in #2 arrived at buyers. 3. Buyer in #1/#2 paid within the discount period. 4. Sold goods with a selling price of $500 and cost of $275 with terms FOB Destination 2/10,n/30. Goods were shipped immediately. 5. Goods in #4 arrived at buyers. 6. Goods in #4/#5 were returned. They were undamaged and in salable condition. 7. Sold goods with a selling price of $5800 and cost of $3,600 with terms FOB Destination 2/10,n/30. Goods were shipped immediately. 8. Goods in #7 arrived at buyers but arrived 2 days late negatively impacting the buyers manufacturing process. 9. Customer in #8 received a $500 credit on his purchase. The customer complained..... a lot. Problem 2: Accounting for Bad Debts: The following is selected account information and activity for the year ended 12/31/19: Beginning Account Balances 1/1/19 Accounts Receivable $60,000 1/1/19 Allowance for Doubtful Accounts $2,000 2019 Activity Sales on account - $800,000 Cash collections of $740,000 net of $12,000 in sales discounts Sales returns totaled $30,000 Sales allowances totaled $10,000 Accounts receivable written-off as uncollectible totaled $2,800 Required Use the information above to calculate bad debts expense under the two following mutually exclusive and independent assumptions: a. A review of 12/31/19 subsidiary accounts receivable indicated that $3,000 was estimated to be uncollectible. b. Bad debts are estimated to run at 0.5% of sales based on historical data adjusted for current credit granting and collection procedures. For each of the above (a., b.) mutually exclusive and independent assumptions: Prepare the appropriate adjusting journal entry. Indicate the financial statement presentation: Net Accounts Receivable for the year-ended 12/31/19. 2019 Bad Debts Expense
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