P8-2 (Bad-Debt Reporting) Presented below are a series of unrelated situations. 1. Spock Company’s unadjusted trial balance at December 31, 2008, included the following accounts. Spock Compan

P8-2 (Bad-Debt Reporting) Presented below are a series of unrelated situations.

1. Spock Company’s unadjusted trial balance at December 31, 2008, included the following accounts.

Spock Company estimates its bad debt expense to be 1 1/ 2% of net sales. Determine its bad debt expense for 2008.

2 An analysis and aging of Scotty Corp. accounts receivable at December 31, 2008, disclosed the following.

What is the net realizable value of Scotty’s receivables at December 31, 2008?

3 Uhura Co. provides for doubtful accounts based on 3% of credit sales. The following data are available for 2008.

What is the balance in the Allowance for Doubtful Accounts at December 31, 2008?

4 At the end of its first year of operations, December 31, 2008, Chekov Inc. reported the following information.

What should be the balance in accounts receivable at December 31, 2008, before subtracting the allowance for doubtful accounts?

5 The following accounts were taken from Chappel Inc.’s trial balance at December 31, 2008.

If doubtful accounts are 3% of accounts receivable, determine the bad debt expense to be reported for 2008. (Warfield 405)

Warfield, Terry D.. Intermediate Accounting: Principles and Analysis, 2nd Edition. John Wiley & Sons, 11/2007. .

P8-9 (Notes Receivable Journal Entries) On December 31, 2008, Menachem Inc. rendered services to Begin Corporation at an agreed price of $91,844.10, accepting $36,000 down and agreeing to accept the balance in four equal installments of $18,000 receivable each December 31. An assumed interest rate of 11% is imputed.

(LO 6)

Instructions

Prepare the entries that would be recorded by Menachem Inc. for the sale and for the receipts and interest on the following dates. (Assume that the effective interest method is used for amortization purposes.)

(a) December 31, 2008.

(b) December 31, 2009.

(c) December 31, 2010.

(d) December 31, 2011.

(e) December 31, 2012. (Warfield 407-408)

Warfield, Terry D.. Intermediate Accounting: Principles and Analysis, 2nd Edition. John Wiley & Sons, 11/2007. .

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Receivables Reporting Template
UNIT 5
PROBLEM 8-2
1.
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Receivables Reporting Template
PROBLEM 8-9
(a)
December 31, 2008
Particulars
L.F.
DEBIT
CREDIT
CASH A/C
36,000
Company B a/c
55,844.10
SALES B A/C
91,844.10
TOTAL
91,844.10
91,844.10
Note for (a):
Total sales amount = $91844.10
Amount Paid in advance = $36000
Remaining amount = 91844.10 – 36000 = $55844.10
(b)
December 31, 2009
CASH A/C
18,000
Company B a/c
11,857.15
Interest revenue a/
6142.85
TOTAL
18000
18000
Note for b:
Principle amount = $55844.10
Interest rate = 11%
Installment amount = $18000
Interest Payment = $6142.85 (55844.10*11%)
Principle payment = 18000 – 6142.85 = $11857.85
December 31, 2010
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