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. Bad debt expense: Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense. Aging of receivables: A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method. 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. Direct write-off method: This method does not make allowance or estimation for uncollectible accounts, instead this method directly write-off the actual uncollectible accounts by debiting bad debt expense, and by crediting accounts receivable. Under this method, accounts would be written off only when the receivables from a customer remain uncollectible. To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

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Answer 1

Question

Chapter 8, Problem 8.5AP

(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.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

Aging of receivables:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method.

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.

Direct write-off method:

This method does not make allowance or estimation for uncollectible accounts, instead this method directly write-off the actual uncollectible accounts by debiting bad debt expense, and by crediting accounts receivable. Under this method, accounts would be written off only when the receivables from a customer remain uncollectible.

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

(b)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

(c)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible.

(d)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible, under direct write-off method.

(e)

To determine

To describe: The advantages of using allowance method rather than direct write-off method in accounting for uncollectible accounts.

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A firm has net working capital of $980, net fixed assets of $4,418, sales of $9,250, and current liabilities of $1,340. How many dollars worth of sales are generated from every $1 in total assets?

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Answer 2

Question

Chapter 8, Problem 8.5AP

(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.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

Aging of receivables:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method.

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.

Direct write-off method:

This method does not make allowance or estimation for uncollectible accounts, instead this method directly write-off the actual uncollectible accounts by debiting bad debt expense, and by crediting accounts receivable. Under this method, accounts would be written off only when the receivables from a customer remain uncollectible.

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

(b)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

(c)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible.

(d)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible, under direct write-off method.

(e)

To determine

To describe: The advantages of using allowance method rather than direct write-off method in accounting for uncollectible accounts.

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Answer 3

Question

Chapter 8, Problem 8.5AP

(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.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

Aging of receivables:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method.

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.

Direct write-off method:

This method does not make allowance or estimation for uncollectible accounts, instead this method directly write-off the actual uncollectible accounts by debiting bad debt expense, and by crediting accounts receivable. Under this method, accounts would be written off only when the receivables from a customer remain uncollectible.

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

(b)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

(c)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible.

(d)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible, under direct write-off method.

(e)

To determine

To describe: The advantages of using allowance method rather than direct write-off method in accounting for uncollectible accounts.

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Answer 4

Question

Chapter 8, Problem 8.5AP

(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.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

Aging of receivables:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method.

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.

Direct write-off method:

This method does not make allowance or estimation for uncollectible accounts, instead this method directly write-off the actual uncollectible accounts by debiting bad debt expense, and by crediting accounts receivable. Under this method, accounts would be written off only when the receivables from a customer remain uncollectible.

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

(b)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

(c)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible.

(d)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible, under direct write-off method.

(e)

To determine

To describe: The advantages of using allowance method rather than direct write-off method in accounting for uncollectible accounts.

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Answer 5

Chapter 8, Problem 8.5AP

(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.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

Aging of receivables:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method.

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.

Direct write-off method:

This method does not make allowance or estimation for uncollectible accounts, instead this method directly write-off the actual uncollectible accounts by debiting bad debt expense, and by crediting accounts receivable. Under this method, accounts would be written off only when the receivables from a customer remain uncollectible.

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

(b)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

(c)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible.

(d)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible, under direct write-off method.

(e)

To determine

To describe: The advantages of using allowance method rather than direct write-off method in accounting for uncollectible accounts.

Answer 6

Chapter 8, Problem 8.5AP

(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.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

Aging of receivables:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method.

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.

Direct write-off method:

This method does not make allowance or estimation for uncollectible accounts, instead this method directly write-off the actual uncollectible accounts by debiting bad debt expense, and by crediting accounts receivable. Under this method, accounts would be written off only when the receivables from a customer remain uncollectible.

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

Answer 7

Chapter 8, Problem 8.5AP

(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.

Bad debt expense:

Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.

Aging of receivables:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method.

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.

Direct write-off method:

This method does not make allowance or estimation for uncollectible accounts, instead this method directly write-off the actual uncollectible accounts by debiting bad debt expense, and by crediting accounts receivable. Under this method, accounts would be written off only when the receivables from a customer remain uncollectible.

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

Answer 8

(b)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

Answer 9

(b)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

Answer 10

(c)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible.

Answer 11

(c)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible.

Answer 12

(d)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible, under direct write-off method.

Answer 13

(d)

To determine

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible, under direct write-off method.

Answer 14

(e)

To determine

To describe: The advantages of using allowance method rather than direct write-off method in accounting for uncollectible accounts.

Answer 15

(e)

To determine

To describe: The advantages of using allowance method rather than direct write-off method in accounting for uncollectible accounts.

Answer 16

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Answer 17

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Answer 18

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Answer 19

Ch. 8 - What is the difference between an account...Ch. 8 - What are some common types of receivables other...Ch. 8 - What are the essential features of the allowance...Ch. 8 - Prob. 4Q Ch. 8 - Prob. 5Q Ch. 8 - 6. What types of receivables does Tootsie Roll...Ch. 8 - Prob. 7Q Ch. 8 - Prob. 8Q Ch. 8 - Prob. 20Q Ch. 8 - Prob. 21Q

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To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2014.

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible.

To prepare: The journal entry to write-off $2,100 of accounts receivable as uncollectible, under direct write-off method.

To describe: The advantages of using allowance method rather than direct write-off method in accounting for uncollectible accounts.

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