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ACCOUNTS WORK | UK US Essays
  • February 6th, 2017

ACCOUNTS WORK

Paper , Order, or Assignment Requirements

WK-4-1
Jane Lee is the owner of a small consulting firm called Lee Solutions. She uses the direct
method to account for uncollectible receivables. On April 14, 2010, Lee Solution’s accounts receivable account balance was $10,000. A week later, it was discovered that Mr. Joe Black, who owed the firm $1,500, will not be able to make the payment.
Required:
a) Prepare a journal entry to account for the amount deemed uncollectible.

Date Account Title and Explanation Debit Credit

b) On May 26, 2010, Mr. Joe Black was able to repay 50% of the amount he owed, which had been previously written-off. Prepare the journal entries required to record this transaction.

Date Account Title and Explanation Debit Credit

On December 31, 2011, Mann Company’s accounts receivable ledger showed an ending balance of $40,000. The company realized that $2,000 of accounts receivable was deemed uncollectible. Prepare a journal entry to demonstrate the treatment of $2,000 uncollectible amount using (a) direct method and (b) allowance method.

a) Direct Method
Date Account Title and Explanation Debit Credit

b) Allowance Method

Date Account Title and Explanation Debit Credit

WK-4-3
B&B Inc. uses the allowance method to account for uncollectible receivables. During 2012,
the company made total credit sales of $1,250,000, of which $300,000 was currently owed by customers. According to the company’s historical sales, 1.5% of the amount will be uncollected. B&B Inc. uses an income statement approach to estimate the amount of uncollectible receivables.
Required: Prepare the journal entry to account for the amount deemed uncollectible.

Date Account Title and Explanation Debit Credit

Fishy Inc. uses the balance sheet approach to estimate uncollectible receivables. Use the following table to determine the amount of bad debt expense, and prepare the journal entry to record the bad debt expense. The allowance account currently has a zero balance.
Aging Category Bad Debt % Balance
30 days 2% $25,000
31 – 60 days 3% 10,000
Over 60 days 4% 2,000
Total $37,000
Aging Category

Bad Debt %

Balance Estimated Bad Debts
30 days 2% $25,000
31 – 60 days 3% 10,000
Over 60 days 4% 2,000
Total $37,000
Date Account Title and Explanation Debit Credit

Wechsler Company has net accounts receivable opening balance of $250,000 and ending balance of $300,000. The total sales amount for the year is $1,700,000, of which 80% are on credit. Normal credit terms are 30 days. Calculate the day sales outstanding and the accounts receivable turnover. Comment on the calculated ratios.

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