Accounts receivable Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business. Allowance method: It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account. Two methods to estimate uncollectible accounts under allowance method are: 1. Percentage of sales method, and 2. Analysis of receivables method. Percentage of sales method: Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales. It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period. The amount of the adjusting entry for uncollectible accounts.

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Answer 1

Question

Chapter 8, Problem 8.3BPE

(a)

To determine

Accounts receivable

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

The amount of the adjusting entry for uncollectible accounts.

(b)

To determine

The adjusted balances of accounts receivable, allowance for doubtful accounts, and bad debt expense.

(c)

To determine

Net realizable value of the accounts receivable.

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Harald Dunn and his wife Evadne operate a successful snack packaging business, Healthy Snacks, in St Mary, Jamaica. The bulk buying of the raw materials (nuts, dried fruits, etc), the packaging and delivery to corporate area shops are done by the members of the family. The accounts for Mr. Dunn’s business at 31st December 2014 showed a profit of $4,500,000 after charging: $180,000 depreciation of equipment and office furniture; $750,000 for salary to his wife Evadne who supervises the office, $496,000 to his 18 year old son Shane, and $1,720,000 to himself. $78,000 interest on a loan he had obtained to expand his business 3 years ago (a) Prepare the statement; with notes where applicable; of the Healthy Snacks business showing the taxable profits and income tax liability for the year of assessment 2014 for Harold Dunn. (b) Shane is a part-time student at the University of the West Indies. What is his tax liability, if any

Answer 2

Question

Chapter 8, Problem 8.3BPE

(a)

To determine

Accounts receivable

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

The amount of the adjusting entry for uncollectible accounts.

(b)

To determine

The adjusted balances of accounts receivable, allowance for doubtful accounts, and bad debt expense.

(c)

To determine

Net realizable value of the accounts receivable.

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Answer 3

Question

Chapter 8, Problem 8.3BPE

(a)

To determine

Accounts receivable

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

The amount of the adjusting entry for uncollectible accounts.

(b)

To determine

The adjusted balances of accounts receivable, allowance for doubtful accounts, and bad debt expense.

(c)

To determine

Net realizable value of the accounts receivable.

Expert Solution & Answer

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Answer 4

Question

Chapter 8, Problem 8.3BPE

(a)

To determine

Accounts receivable

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

The amount of the adjusting entry for uncollectible accounts.

(b)

To determine

The adjusted balances of accounts receivable, allowance for doubtful accounts, and bad debt expense.

(c)

To determine

Net realizable value of the accounts receivable.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 8.3BPE

(a)

To determine

Accounts receivable

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

The amount of the adjusting entry for uncollectible accounts.

(b)

To determine

The adjusted balances of accounts receivable, allowance for doubtful accounts, and bad debt expense.

(c)

To determine

Net realizable value of the accounts receivable.

Answer 6

Chapter 8, Problem 8.3BPE

(a)

To determine

Accounts receivable

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

The amount of the adjusting entry for uncollectible accounts.

Answer 7

Chapter 8, Problem 8.3BPE

(a)

To determine

Accounts receivable

Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

The amount of the adjusting entry for uncollectible accounts.

Answer 8

(b)

To determine

The adjusted balances of accounts receivable, allowance for doubtful accounts, and bad debt expense.

Answer 9

(b)

To determine

The adjusted balances of accounts receivable, allowance for doubtful accounts, and bad debt expense.

Answer 10

(c)

To determine

Net realizable value of the accounts receivable.

Answer 11

(c)

To determine

Net realizable value of the accounts receivable.

Answer 12

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Answer 14

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Answer 15

Ch. 8 - What are the three classifications of receivables?Ch. 8 - Dans Hardware is a small hardware store in the...Ch. 8 - What kind of an account (asset, liability, etc.)...Ch. 8 - After the accounts are adjusted and closed at the...Ch. 8 - A firm has consistently adjusted its allowance...Ch. 8 - Which of the two methods of estimating...Ch. 8 - Neptune Company issued a note receivable to...Ch. 8 - Prob. 8DQ Ch. 8 - The maker of a 240,000, 6%, 90-day note receivable...Ch. 8 - The note receivable dishonored in Discussion...

Solution Summary: The author explains how accounts receivable is an asset of a business. Allowance method estimates bad debt expenses by multiplying the expected percentage of uncollectible with the net credit sale.

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The adjusted balances of accounts receivable, allowance for doubtful accounts, and bad debt expense.

Net realizable value of the accounts receivable.

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