Accounts Receivable: It refers to the amount that is to be received by a company for providing goods and services on credit. It is an asset account. Bad Debts : It refers to the amount that was expected to be received on credit sales but went uncollectible. It is a loss to the company. Journal Entry : It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health. Rules of Journal Entry: Assets: Increase in asset should be debit and decrease should be credit. Liabilities: Increase in liabilities should be credit and decrease should be debit. Equity: Increase in Equity should be credit and decrease should be debit. Expense: Increase in expense should be debit and decrease should be credit. Revenue: Increase in revenue should be credit and decrease should be debit. 1. To prepare: Adjustment entry to record the given transactions for uncollectible.

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Answer 1

Question

Chapter 7, Problem 7SP

To determine

Accounts Receivable:

It refers to the amount that is to be received by a company for providing goods and services on credit. It is an asset account.

Bad Debts:

It refers to the amount that was expected to be received on credit sales but went uncollectible. It is a loss to the company.

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

1.

To prepare: Adjustment entry to record the given transactions for uncollectible.

2.

To determine

To prepare: Adjustment entry when there is debit balance of allowance for doubtful for accounts using the facts in 1b.

3.

To determine

To explain: Whether the company should consider the direct write off method of accounting for bad debts expense rather than one of the allowance methods considered in part 1.

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Answer 2

Question

Chapter 7, Problem 7SP

To determine

Accounts Receivable:

It refers to the amount that is to be received by a company for providing goods and services on credit. It is an asset account.

Bad Debts:

It refers to the amount that was expected to be received on credit sales but went uncollectible. It is a loss to the company.

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

1.

To prepare: Adjustment entry to record the given transactions for uncollectible.

2.

To determine

To prepare: Adjustment entry when there is debit balance of allowance for doubtful for accounts using the facts in 1b.

3.

To determine

To explain: Whether the company should consider the direct write off method of accounting for bad debts expense rather than one of the allowance methods considered in part 1.

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Answer 3

Question

Chapter 7, Problem 7SP

To determine

Accounts Receivable:

It refers to the amount that is to be received by a company for providing goods and services on credit. It is an asset account.

Bad Debts:

It refers to the amount that was expected to be received on credit sales but went uncollectible. It is a loss to the company.

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

1.

To prepare: Adjustment entry to record the given transactions for uncollectible.

2.

To determine

To prepare: Adjustment entry when there is debit balance of allowance for doubtful for accounts using the facts in 1b.

3.

To determine

To explain: Whether the company should consider the direct write off method of accounting for bad debts expense rather than one of the allowance methods considered in part 1.

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Answer 4

Question

Chapter 7, Problem 7SP

To determine

Accounts Receivable:

It refers to the amount that is to be received by a company for providing goods and services on credit. It is an asset account.

Bad Debts:

It refers to the amount that was expected to be received on credit sales but went uncollectible. It is a loss to the company.

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

1.

To prepare: Adjustment entry to record the given transactions for uncollectible.

2.

To determine

To prepare: Adjustment entry when there is debit balance of allowance for doubtful for accounts using the facts in 1b.

3.

To determine

To explain: Whether the company should consider the direct write off method of accounting for bad debts expense rather than one of the allowance methods considered in part 1.

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Answer 5

Chapter 7, Problem 7SP

To determine

Accounts Receivable:

It refers to the amount that is to be received by a company for providing goods and services on credit. It is an asset account.

Bad Debts:

It refers to the amount that was expected to be received on credit sales but went uncollectible. It is a loss to the company.

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

1.

To prepare: Adjustment entry to record the given transactions for uncollectible.

2.

To determine

To prepare: Adjustment entry when there is debit balance of allowance for doubtful for accounts using the facts in 1b.

3.

To determine

To explain: Whether the company should consider the direct write off method of accounting for bad debts expense rather than one of the allowance methods considered in part 1.

Answer 6

Chapter 7, Problem 7SP

To determine

Accounts Receivable:

It refers to the amount that is to be received by a company for providing goods and services on credit. It is an asset account.

Bad Debts:

It refers to the amount that was expected to be received on credit sales but went uncollectible. It is a loss to the company.

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

1.

To prepare: Adjustment entry to record the given transactions for uncollectible.

Answer 7

Chapter 7, Problem 7SP

To determine

Accounts Receivable:

It refers to the amount that is to be received by a company for providing goods and services on credit. It is an asset account.

Bad Debts:

It refers to the amount that was expected to be received on credit sales but went uncollectible. It is a loss to the company.

Journal Entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of Journal Entry:

Assets: Increase in asset should be debit and decrease should be credit.

Liabilities: Increase in liabilities should be credit and decrease should be debit.

Equity: Increase in Equity should be credit and decrease should be debit.

Expense: Increase in expense should be debit and decrease should be credit.

Revenue: Increase in revenue should be credit and decrease should be debit.

1.

To prepare: Adjustment entry to record the given transactions for uncollectible.

Answer 8

2.

To determine

To prepare: Adjustment entry when there is debit balance of allowance for doubtful for accounts using the facts in 1b.

Answer 9

2.

To determine

To prepare: Adjustment entry when there is debit balance of allowance for doubtful for accounts using the facts in 1b.

Answer 10

3.

To determine

To explain: Whether the company should consider the direct write off method of accounting for bad debts expense rather than one of the allowance methods considered in part 1.

Answer 11

3.

To determine

To explain: Whether the company should consider the direct write off method of accounting for bad debts expense rather than one of the allowance methods considered in part 1.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 7 - Prob. 1MCQ Ch. 7 - Prob. 2MCQ Ch. 7 - Prob. 3MCQ Ch. 7 - Prob. 4MCQ Ch. 7 - Prob. 5MCQ Ch. 7 - Prob. 1DQ Ch. 7 - Prob. 2DQ Ch. 7 - Prob. 3DQ Ch. 7 - Prob. 4DQ Ch. 7 - Prob. 5DQ

Solution Summary: The author explains how to prepare an adjustment entry to record bad debts expense as a percentage of total sales.

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To prepare: Adjustment entry when there is debit balance of allowance for doubtful for accounts using the facts in 1b.

To explain: Whether the company should consider the direct write off method of accounting for bad debts expense rather than one of the allowance methods considered in part 1.

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Chapter 7 Solutions