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. Percentage-of-sales basis: 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. 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. (a) To identify: Whether Company D uses direct write-off method, or the allowance method for accounting bad debts.

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Answer 1

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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.

Percentage-of-sales basis:

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.

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.

(a)

To identify: Whether Company D uses direct write-off method, or the allowance method for accounting bad debts.

(b)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under aging schedule method.

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

(c)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, if the allowance for doubtful accounts have unadjusted debit balance of $1,000.

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

(d)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible.

(e)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible, under direct write-off method.

(f)

To determine

To identify: The type of account for allowance for doubtful accounts, and show how it affects accounts receivable reported on the balance sheet.

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Can you solve this financial accounting problem with appropriate steps and explanations?

Murray Industries applies manufacturing overhead to its cost objects on the basis of 75% of direct material cost. If Job 37A had $96,000 of manufacturing overhead applied to it during July, the direct materials assigned to Job 37A was: A. $72,000 B. $96,000 C. $128,000 D. $144,000

Arden Manufacturing uses a process costing system. Beginning inventory for June consisted of 2,400 units that were 55% completed. 14,500 units were started during June. On June 30, the inventory consisted of 1,200 units that were 40% completed. How many units were completed during the period?

Answer 2

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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.

Percentage-of-sales basis:

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.

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.

(a)

To identify: Whether Company D uses direct write-off method, or the allowance method for accounting bad debts.

(b)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under aging schedule method.

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

(c)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, if the allowance for doubtful accounts have unadjusted debit balance of $1,000.

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

(d)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible.

(e)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible, under direct write-off method.

(f)

To determine

To identify: The type of account for allowance for doubtful accounts, and show how it affects accounts receivable reported on the balance sheet.

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Answer 3

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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.

Percentage-of-sales basis:

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.

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.

(a)

To identify: Whether Company D uses direct write-off method, or the allowance method for accounting bad debts.

(b)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under aging schedule method.

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

(c)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, if the allowance for doubtful accounts have unadjusted debit balance of $1,000.

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

(d)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible.

(e)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible, under direct write-off method.

(f)

To determine

To identify: The type of account for allowance for doubtful accounts, and show how it affects accounts receivable reported on the balance sheet.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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.

Percentage-of-sales basis:

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.

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.

(a)

To identify: Whether Company D uses direct write-off method, or the allowance method for accounting bad debts.

(b)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under aging schedule method.

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

(c)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, if the allowance for doubtful accounts have unadjusted debit balance of $1,000.

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

(d)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible.

(e)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible, under direct write-off method.

(f)

To determine

To identify: The type of account for allowance for doubtful accounts, and show how it affects accounts receivable reported on the balance sheet.

Expert Solution & Answer

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Check out a sample textbook solution

See solution

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.

Percentage-of-sales basis:

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.

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.

(a)

To identify: Whether Company D uses direct write-off method, or the allowance method for accounting bad debts.

(b)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under aging schedule method.

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

(c)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, if the allowance for doubtful accounts have unadjusted debit balance of $1,000.

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

(d)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible.

(e)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible, under direct write-off method.

(f)

To determine

To identify: The type of account for allowance for doubtful accounts, and show how it affects accounts receivable reported on the balance sheet.

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.

Percentage-of-sales basis:

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.

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.

(a)

To identify: Whether Company D uses direct write-off method, or the allowance method for accounting bad debts.

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.

Percentage-of-sales basis:

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.

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.

(a)

To identify: Whether Company D uses direct write-off method, or the allowance method for accounting bad debts.

Answer 8

(b)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under aging schedule method.

Answer 9

(b)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under aging schedule method.

Answer 10

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

Answer 11

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

Answer 12

(c)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, if the allowance for doubtful accounts have unadjusted debit balance of $1,000.

Answer 13

(c)(1)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, if the allowance for doubtful accounts have unadjusted debit balance of $1,000.

Answer 14

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

Answer 15

(2)

To determine

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

Answer 16

(d)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible.

Answer 17

(d)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible.

Answer 18

(e)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible, under direct write-off method.

Answer 19

(e)

To determine

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible, under direct write-off method.

Answer 20

(f)

To determine

To identify: The type of account for allowance for doubtful accounts, and show how it affects accounts receivable reported on the balance sheet.

Answer 21

(f)

To determine

To identify: The type of account for allowance for doubtful accounts, and show how it affects accounts receivable reported on the balance sheet.

Answer 22

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Answer 23

Expert Solution & Answer

Answer 24

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Answer 25

Ch. 8 - Prob. 1Q Ch. 8 - Prob. 2Q Ch. 8 - Prob. 3Q Ch. 8 - Prob. 4Q Ch. 8 - Prob. 5Q Ch. 8 - 6. Distinguish between the two bases that may be...Ch. 8 - Prob. 7Q Ch. 8 - Prob. 8Q Ch. 8 - Prob. 9Q Ch. 8 - Prob. 10Q

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To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under aging schedule method.

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, if the allowance for doubtful accounts have unadjusted debit balance of $1,000.

To prepare: The adjusting entry for recording the bad debt expenses at December 31, 2019, under percentage of sales basis.

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible.

To prepare: The journal entry to write-off $3,000 of accounts receivable as uncollectible, under direct write-off method.

To identify: The type of account for allowance for doubtful accounts, and show how it affects accounts receivable reported on the balance sheet.

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