USEA

University of South East Asia

2014-2015

Exercise Chapter 6: Receivable

I-Atlas Company uses the direct-write-off method to account for its uncollectible accounts. In
2010, credit sales were $130,000. On March 7, 2011. A customer owing $1600 was declare
bankrupt. Prepare journal entries relating to uncollectible accounts for
a)- 2010 and
b)- March 7, 2011

II-The December 31, 2010, trial balance of the Mark Company before adjustments included the
following accounts:
Debit
Allowance for doubtful account

Credit

2,000

Sales

830,000

Sales returns and allowances

10,000

Mark estimates its bad debts based upon 2 percent of net sales. What amount should Mark record
as bad debt expense for 2010?

III-The following account balances are for Cobb Incorporated:

Account receivable
110,000

Sales
320,000

Allowance for
Uncollectible account
300

Prepare the adjusting entry to provide for bad debts if the uncollectible expense is estimated
a)-at 1 percent of net sales and
b)-by aging the accounts receivable and assuming the needed allowance balance is estimated at
$3,300.

Lecturer: Hour Ry

18

Exercise Financial Accounting

USEA
University of South East Asia

2014-2015

IV- Use the aging schedule below to make the adjusting entry needed to provide for the
uncollectible accounts expense. Assume the allowance account has a credit balance of $2,400.
Age of Account

Amount

Percent Uncollectible

1-30 days
31-60 days
61-180 days
181 days and over
Total

$28,000
19,000
9,000
5,000
$61,000

1
4
20
50

Amount Needed in
allowance account at
years end
$280
760
1,800
2,500
$5,340

V-With regard to problem IV, what will be reported in the balance sheet?
VI-Assume the same facts as in problem IV except that the allowance account has a debit
balance of $2,400. Prepare the appropriate journal entry.

VII-Prepare journal entries for the following transactions:

May 10-W. Hooks account of $1,100 was deemed uncollectible.
June 20-S. Brooks, who owes us $900, has been declared bankrupt.
July 7- W. Hook paid us back $800.

VIII-James Corporation borrowed $6,000 for 60 days at 20 percent interest from the Sunset
Bank. Interest is to be paid in advance. Prepare the journal entries to record
a)-the loan and
b)-the payment

IX-With regard to problem VIII, what entry would be made at the end of 60 days if James
Corporation were unable to repay the loan and an additional 60-day renewal were given?
Assume interest is to be paid in advance.

X-If in problem VIII the interest was to be paid upon maturity of the note, what entries would be
made to record
a)-the loan and
b)-the payment
Lecturer: Hour Ry

19

Exercise Financial Accounting