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 year-end adjusting entry to record the bad debt expense under each assumption.

Question

BrightClean Car Wash reviewed its water bill and found that the highest bill was $5,000 when they washed 500 cars, and the lowest bill was $3,200 when they washed 300 cars. What is the variable cost per car associated with the water bill? A) $8.00 B) $9.00 C) $7.50 D) $8.50

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 8.5BP

(a)(1)

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 year-end adjusting entry to record the bad debt expense under each assumption.

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

(b)(1)

To determine

To repeat: Requirement (a), assume allowance for doubtful accounts has a debit balance of $1,100.

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

(c)

To determine

To prepare: The journal entry to write-off $3,200 of accounts receivable as uncollectible.

(d)

To determine

To prepare: The journal entry to write-off $3,200 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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BrightClean Car Wash reviewed its water bill and found that the highest bill was $5,000 when they washed 500 cars, and the lowest bill was $3,200 when they washed 300 cars. What is the variable cost per car associated with the water bill? A) $8.00 B) $9.00 C) $7.50 D) $8.50

what was the stockholders' equity at year-end? accounting question

what was the stockholders' equity at year-end

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 8.5BP

(a)(1)

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 year-end adjusting entry to record the bad debt expense under each assumption.

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

(b)(1)

To determine

To repeat: Requirement (a), assume allowance for doubtful accounts has a debit balance of $1,100.

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

(c)

To determine

To prepare: The journal entry to write-off $3,200 of accounts receivable as uncollectible.

(d)

To determine

To prepare: The journal entry to write-off $3,200 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

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 8.5BP

(a)(1)

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 year-end adjusting entry to record the bad debt expense under each assumption.

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

(b)(1)

To determine

To repeat: Requirement (a), assume allowance for doubtful accounts has a debit balance of $1,100.

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

(c)

To determine

To prepare: The journal entry to write-off $3,200 of accounts receivable as uncollectible.

(d)

To determine

To prepare: The journal entry to write-off $3,200 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

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 8.5BP

(a)(1)

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 year-end adjusting entry to record the bad debt expense under each assumption.

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

(b)(1)

To determine

To repeat: Requirement (a), assume allowance for doubtful accounts has a debit balance of $1,100.

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

(c)

To determine

To prepare: The journal entry to write-off $3,200 of accounts receivable as uncollectible.

(d)

To determine

To prepare: The journal entry to write-off $3,200 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 8.5BP

(a)(1)

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 year-end adjusting entry to record the bad debt expense under each assumption.

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

(b)(1)

To determine

To repeat: Requirement (a), assume allowance for doubtful accounts has a debit balance of $1,100.

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

(c)

To determine

To prepare: The journal entry to write-off $3,200 of accounts receivable as uncollectible.

(d)

To determine

To prepare: The journal entry to write-off $3,200 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 8.5BP

(a)(1)

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 year-end adjusting entry to record the bad debt expense under each assumption.

Answer 7

Chapter 8, Problem 8.5BP

(a)(1)

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 year-end adjusting entry to record the bad debt expense under each assumption.

Answer 8

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

Answer 9

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

Answer 10

(b)(1)

To determine

To repeat: Requirement (a), assume allowance for doubtful accounts has a debit balance of $1,100.

Answer 11

(b)(1)

To determine

To repeat: Requirement (a), assume allowance for doubtful accounts has a debit balance of $1,100.

Answer 12

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

Answer 13

(2)

To determine

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

Answer 14

(c)

To determine

To prepare: The journal entry to write-off $3,200 of accounts receivable as uncollectible.

Answer 15

(c)

To determine

To prepare: The journal entry to write-off $3,200 of accounts receivable as uncollectible.

Answer 16

(d)

To determine

To prepare: The journal entry to write-off $3,200 of accounts receivable as uncollectible, under direct write-off method.

Answer 17

(d)

To determine

To prepare: The journal entry to write-off $3,200 of accounts receivable as uncollectible, under direct write-off method.

Answer 18

(e)

To determine

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

Answer 19

(e)

To determine

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

Answer 20

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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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Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

To repeat: Requirement (a), assume allowance for doubtful accounts has a debit balance of $1,100.

Prepare adjusting journal entry at December 31, 2015 to record bad debt expense, if company estimates that its 2% of sales will be uncollectible.

To prepare: The journal entry to write-off $3,200 of accounts receivable as uncollectible.

To prepare: The journal entry to write-off $3,200 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.

Chapter 8 Solutions