Professional Documents
Culture Documents
1,400
4,875
4,500
4,500
$396,000 x 0.01 =
90,000 x 0.02 =
36,000 x 0.05 =
18,000 x 0.07 =
30,000 x 0.10 =
$ 3,960
1,800
1,800
1,260
3,000
$11,820 credit
$25,650 credit
2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
417
b.
Dec. 31 Bad Debts Expense.............................................. 13,650
Allowance for Doubtful Accounts ................
13,650
$12,000 credit
25,650 credit
$13,650 credit
c.
Dec. 31 Bad Debts Expense.............................................. 26,650
Allowance for Doubtful Accounts ................
To record estimated bad debts.*
*
$ 1,000 debit
25,650 credit
$26,650 credit
26,650
2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
418
4,875
580
580
580
580
To reinstate an account.
580
580
4,500
4,500
6,000
6,000
12,500
2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
419
685
Unadjusted balance
Estimated balance ($55,000 x .02)
Required adjustment
= $ 415
= 1,100
= $ 685
credit
credit
credit
b.
Dec. 31 Bad Debts Expense** ....................................................1,391
Allowance for Doubtful Accounts........................
1,391
Unadjusted balance
Estimated balance ($55,000 x .02)
Required adjustment
= $ 291
= 1,100
= $1,391
debit
credit
credit
31,390
Part 3
Writing off the account receivable in 2014 will not directly affect Year 2014 net income.
The entry to write off an account involves a debit to Allowance for Doubtful Accounts
and a credit to Accounts Receivable, both of which are balance sheet accounts. Net
income is affected only by the annual recognition of the estimated bad debts expense,
which is journalized as an adjusting entry. Net income for Year 2013 (the year of the
original sale) included an estimated expense for write-offs such as this one.
2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
420
685,350
685,350
500,000
b.
Cash .....................................................................
Accounts Receivable ...................................
482,300
482,300
c.
9,350
9,350
d.
11,287
11,287
$
0
685,350
(482,300)
(9,350)
193,700
x 1.0%
1,937**
9,350
$ 11,287
Cr.
Dr.
Cr.
2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
421
870,220
870,220
650,000
f.
Cash ......................................................................
Accounts Receivable ....................................
990,800
990,800
g.
11,090
11,090
h.
9,773
9,773
$ 193,670
870,220
(990,800)
(11,090)
62,000
x 1.0%
620 Cr.
9,153 Dr.
9,773 Cr.
2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
422
6,000
80
6,000
80
6,240
6,000
160
80
9,500
380
9,500
9,880
2012
Dec. 13
Dec. 31
9,500
38
9,500
38
423
2013
Jan. 27 Cash ....................................................................... 9,595
Interest Revenue* ............................................
Interest Receivable .........................................
Notes ReceivableM. Lee .............................
57
38
9,500
5,000
2,000
15
2,000
2,015
125
5,000
2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
424
7,245
5,000
20,000
5,859
10,000
2013 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This
document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
425