Accounting Principle - Answers Problem set B Chapter 9 Essay

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SOLUTIONS TO HOMEWORK
PROBLEM 9-1B

(a) 1.
2.
3.
4.
5.

Accounts Receivable ...................................
Sales Revenue ......................................

2,600,000

Sales Returns and Allowances ...................
Accounts Receivable ...........................

45,000

Cash ..............................................................
Accounts Receivable ...........................

2,250,000

Allowance for Doubtful Accounts ...............
Accounts Receivable ...........................

10,000

Accounts Receivable ...................................
Allowance for Doubtful
Accounts ...........................................

3,000

Cash ..............................................................
Accounts Receivable ...........................

3,000

2,600,000
45,000
2,250,000
10,000

3,000
3,000

(b)
Bal.
(1)
(5)
Bal.

Accounts Receivable
250,000 (2)
45,000
2,600,000 (3)
2,250,000
3,000 (4)
10,000
(5)
3,000
545,000

Allowance for Doubtful Accounts
(4)
10,000 Bal.
15,000
(5)
3,000

Bal.

8,000

(c) Balance before adjustment [see (b)] ....................................
Balance needed .....................................................................
Adjustment required ..............................................................

$ 8,000
22,000
$14,000

The journal entry would therefore be as follows:
Bad Debt Expense.............................................
Allowance for Doubtful Accounts ............

(d)

14,000
14,000

$2,555,000
$2,600,000 – $45,000
=
= 6.74 times
$379, 000
($523,000 + $235,000) ÷ 2

Copyright © 2013 John Wiley & Sons, Inc.

Weygandt, Accounting Principles, 11/e, Solutions Manual

(For Instructor Use Only)

9-1

PROBLEM 9-2B

(a) $22,150.
(b) $20,000 ($1,000,000 X 2%).
(c) $14,450 [($369,000 X 5%) – $4,000].
(d) $20,450 [($369,000 X 5%) + $2,000].
(e) There are two major weaknesses with the direct write-off method. First, it does not match expenses with the associated revenues. Second, the accounts receivable are not stated at cash realizable value at the balance sheet date.

PROBLEM 9-3B

(a) Dec. 31

Bad Debt Expense ....................................
Allowance for Doubtful Accounts
($47,970 – $16,000) .......................

31,970
31,970

(a) & (b)
Bad Debt Expense
Date
Explanation
2014
Dec. 31 Adjusting

Ref.

Mar. 1

May 1
1

(c)
Dec. 31

Credit

31,970

Allowance for Doubtful Accounts
Date
Explanation
2014
Dec. 31 Balance
31 Adjusting
2015
Mar. 1
May 1
(b)

Debit

Ref.

Debit

31,970

Credit

Balance

31,970

16,000
47,970

1,900

46,070
47,970

1,900

2015
(1)
Allowance for Doubtful Accounts ............
Accounts Receivable .........................
(2)
Accounts Receivable ................................
Allowance for Doubtful Accounts .......
Cash ...........................................................
Accounts Receivable .........................
2015
Bad Debt Expense .....................................
Allowance for Doubtful Accounts
($38,300 + $2,000) ..........................

Copyright © 2013 John Wiley & Sons, Inc.

Weygandt, Accounting Principles, 11/e, Solutions Manual

Balance

1,900
1,900
1,900
1,900
1,900
1,900

40,300
40,300

(For Instructor Use Only)

9-3

PROBLEM 9-4B

(a)

Total estimated bad debts

Total

Number of Days Outstanding
0–30
31–60
61–90 91–120 Over 120

Accounts receivable $375,000 $220,000 $90,000 $40,000 $10,000 $15,000
% uncollectible
1%
4%
5%
8%
20%
Estimated
Bad debts
$ 11,600 $ 2,200 $ 3,600 $ 2,000 $ 800 $ 3,000

(b) Bad Debt Expense ....................................................
Allowance for Doubtful Accounts
($11,600 – $3,000) ............................................

8,600

(c) Allowance for Doubtful Accounts ............................
Accounts Receivable .........................................

1,600

(d) Accounts Receivable ................................................
Allowance for Doubtful Accounts .....................

700

Cash…