accounting post lecture

Topics: Accounts receivable, Bad debt, Debt Pages: 5 (486 words) Published: December 4, 2013
HW 8 – 1
ACCOUNTS RECEIVABLE JOURNAL ENTRIES

Prepare journal entries to record the following transactions:

(1) On December 15, 2008, the company recorded $150,000 sales on credit.

(2) On December 31, 2008, the company estimated bad debt expenses of $15,000.

(3) On January 12, 2009, collect $100,000 worth of accounts receivable.

(4) After many collection attempts, the Company determined on June 15, 2009 that it would not collect $10,000 in accounts receivables from Pendant Publishing. It decided to write-off this account.

(5) On July 15, Pendant Publishing called to say that they have had financial problems but can afford to pay $7,000 to settle their $10,000 debt in full. Vandolay Industries agreed to these terms, and reversed $7,000 of the prior write-off. It received a $7,000 check from Pendant the next day.

Post the above entries to the following T-accounts:

Accounts Receivable

Allowance for Doubtful Accounts

HW 8 – 2
ESTIMATION AND RECORDING OF UNCOLLECTIBLE ACCOUNTS –
AGING OF ACCOUNTS RECEIVABLE METHOD

Part 1 – In 2009, Vandolay reported $300,000 in sales. The company’s allowance for doubtful accounts has an unadjusted credit balance of $12,000. Vandolay Industries accountants prepared the following Aging of Accounts Receivable:

Customer
Total
Number of days unpaid

0-30
30-60
60-90
Over 90
Alpha Sales
$ 700

$ 700

Gamma Manufacturing Co.
1,900
$ 1,900

Delta Shipping Corp.
2,200

$2,200

Epsilon Industries
6,000

$6,000
Theta Manufacturing
1,800

1,800

Zeta Industries
600

600

Other customers
136,800
88,100
26,900
9,800
12,000
Totals
$150,000
$90,000
$30,000
$12,000
$18,000

Vandolay accountants believe that receivables 0-30 days old have a 2% chance of noncollection. Receivables 30-60 days old have a 4% chance of noncollection. Receivables 60-90 days old have an 8% chance of noncollection. Receivables over 90 days old have a 20% chance of noncollection. The company’s allowance for doubtful accounts has an unadjusted credit balance of $12,000. Prepare the required adjusting journal entry.

Bad Debt Expense

Allowance for Doubtful Accounts

HW 8 – 2, CONTINUED

Part 2 – Assume instead that the company’s allowance for doubtful accounts has an unadjusted debit balance of $400. Prepare the required adjusting journal entry.

Bad Debt Expense

Allowance for Doubtful Accounts

HW 8 – 3
ESTIMATION AND RECORDING OF UNCOLLECTIBLE ACCOUNTS –
PERCENTAGE OF CREDIT SALES RECEIVABLE METHOD

Part 1 – In 2009, Vandolay reported $300,000 in sales. The company’s allowance for doubtful accounts has an unadjusted credit balance of $12,000. Based on prior experience, management estimates that 2.5% of sales will result in bad debts. Prepare the required adjusting journal entry.

Bad Debt Expense

Allowance for Doubtful Accounts

Part 2 – Assume instead that the company’s allowance for doubtful accounts has an unadjusted debit balance of $400. Prepare the required adjusting journal entry.

Bad Debt Expense

Allowance for Doubtful Accounts

HW 8 – 4
NOTES RECEIVABLE

On April 1, 2008, Vandolay loans a $10,000 note to a customer opening a new store. The note, which bears 10% annual interest, becomes due on March 31, 2009. Prepare the required journal entry.

Note Receivable

Cash

On December 31, 2008, Vandolay accrued interest for the portion of the year that the note was outstanding. Prepare the required adjusting journal entry.

Interest...
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