Question 1

Table 9-5
The Ritchie Company gathered the following information pertaining to its year ended December 31, 2019, prior to any adjustments:
 $$\begin{array} { | l | r | r | } 
\hline \text { Net credit sales for the year } & \$ 780,000 & \
\hline \text { Accounts receivable, Dec. } 31,2019 & 170,000 & \
\hline \text { Allowance for doubtful accounts, } & & \
\text { December } 31,2019 & 3,200 & \mathrm { Cr } . \
\hline & & \
\hline
\end{array}$$ Aging of accounts receivable at December 31, 2019:
 $$\begin{array} { | l | r | } 
\hline 1 - 30 \text { days } & \$ 95,000 \
\hline 31 - 60 \text { days } & 38,000 \
\hline 61 - 90 \text { days } & 23,000 \
\hline \text { Over } 90 \text { days } & 14,000 \
\hline \text { Total } & \$ 170,000 \
\hline
\end{array}$$
-Refer to Table 9-5. Assume Ritchie uses the aging-of-accounts-receivable method for estimating uncollectible accounts. Ritchie estimates that uncollectible accounts will be aged as follows: 3% for 1-30 days; 5% for 31-60 days; 8% for 61-90 days; and 20% for over 90 days. The adjusting entry to record bad-debt expense for the year is:

Accepted Answer

The answer of Table 9-5
The Ritchie Company gathered the following...

Question 2

Table 9-5
The Ritchie Company gathered the following information pertaining to its year ended December 31, 2019, prior to any adjustments:
 $$\begin{array} { | l | r | r | } 
\hline \text { Net credit sales for the year } & \$ 780,000 & \
\hline \text { Accounts receivable, Dec. } 31,2019 & 170,000 & \
\hline \text { Allowance for doubtful accounts, } & & \
\text { December } 31,2019 & 3,200 & \mathrm { Cr } . \
\hline & & \
\hline
\end{array}$$ Aging of accounts receivable at December 31, 2019:
 $$\begin{array} { | l | r | } 
\hline 1 - 30 \text { days } & \$ 95,000 \
\hline 31 - 60 \text { days } & 38,000 \
\hline 61 - 90 \text { days } & 23,000 \
\hline \text { Over } 90 \text { days } & 14,000 \
\hline \text { Total } & \$ 170,000 \
\hline
\end{array}$$
-Refer to Table 9-5. Assume Ritchie uses the percent-of-sales method for estimating uncollectible accounts. Ritchie estimates that bad-debt expense will be 0.6% of net credit sales. The balance in allowance for doubtful accounts after the adjusting entry for uncollectible accounts will be:

Accepted Answer

The correct answer is A because the balance in the allowance for doubtful accounts after the adjusting entry for uncollectible accounts will be $7,880. This is calculated by multiplying the net credit sales by the estimated bad debt expense rate of 0.6%, which equals $4,680 ($780,000 x 0.006). This amount is then added to the existing balance in the allowance for doubtful accounts of $3,200, resulting in a new balance of $7,880.

Question 3

Table 9-5
The Ritchie Company gathered the following information pertaining to its year ended December 31, 2019, prior to any adjustments:
 $$\begin{array} { | l | r | r | } 
\hline \text { Net credit sales for the year } & \$ 780,000 & \
\hline \text { Accounts receivable, Dec. } 31,2019 & 170,000 & \
\hline \text { Allowance for doubtful accounts, } & & \
\text { December } 31,2019 & 3,200 & \mathrm { Cr } . \
\hline & & \
\hline
\end{array}$$ Aging of accounts receivable at December 31, 2019:
 $$\begin{array} { | l | r | } 
\hline 1 - 30 \text { days } & \$ 95,000 \
\hline 31 - 60 \text { days } & 38,000 \
\hline 61 - 90 \text { days } & 23,000 \
\hline \text { Over } 90 \text { days } & 14,000 \
\hline \text { Total } & \$ 170,000 \
\hline
\end{array}$$
-Refer to Table 9-5. Assume Ritchie uses the aging-of-accounts-receivable method for estimating uncollectible accounts. Ritchie estimates that bad-debt expense will be aged as follows: 2.5% for 1-30 days; 4.5% for 31-60 days; 7.5% for 61-90 days; and 22.5% for over 90 days. After the adjustment for uncollectible accounts is made, the net realizable value of the accounts receivable will be:

Accepted Answer

The estimated uncollectible amounts are calculated as follows:  1-30 days: $95,000 * 2.5% = $2,375  31-60 days: $38,000 * 4.5% = $1,710  61-90 days: $23,000 * 7.5% = $1,725  Over 90 days: $14,000 * 22.5% = $3,150  Total estimated uncollectible = $2,375 + $1,710 + $1,725 + $3,150 = $8,960  The allowance for doubtful accounts needs to be adjusted to $8,960. The current balance is $3,200, so the adjustment needed is $8,960 - $3,200 = $5,760.  The net realizable value of accounts receivable is:  Accounts receivable - Allowance for doubtful accounts = $170,000 - $8,960 = $161,040.

Question 4

Under the allowance method, if uncollectible account write-offs during the year exceed the allowance amount, the balance in allowance for doubtful accounts at year end prior to adjustment:

Accepted Answer

When write-offs exceed the allowance amount, the allowance for doubtful accounts will have a debit balance because the write-offs have reduced the allowance below zero.

Question 5

Lester Company uses the allowance method and estimates its bad-debt expense based on aging the receivables. Before the adjusting entry, the allowance for doubtful accounts had a $425 debit balance. Based on aged receivables, Lester estimates that $3,700 will probably prove uncollectible. What is the amount of the adjusting journal entry that Lester should make?

Accepted Answer

The adjusting entry should bring the allowance for doubtful accounts to the estimated uncollectible amount of $3,700. Since there is already a $425 debit balance, Lester needs to credit $4,125 to the allowance account to offset the debit and reach the desired balance.

Question 6

Accounts receivable has a debit balance of $5,000, and the allowance for doubtful accounts has a credit balance of $440. A specific account of $160 is written off. What is the amount of net receivables after the write-off?

Accepted Answer

The answer of Accounts receivable has a debit balance of...

Question 7

The current credit balance in allowance for doubtful accounts before adjustment is $658. An aging schedule reveals $3,500 of uncollectible accounts. The ending balance in allowance for doubtful accounts should be:

Accepted Answer

The ending balance in the allowance for doubtful accounts should match the estimate from the aging schedule, which is $3,500. This is because the allowance account is adjusted to reflect the current estimate of uncollectible accounts.

Question 8

Table 9-1
Ringo Company had the following information relating to net credit sales for 2019:
 $$\begin{array} { | c | r | c | } 
\hline \text { Accounts receivable, Jan. 1, 2019 } & \$ 18,000 & \text { Dr. } \
\hline \text { Allowance for doubtful accounts, } & & \
\text { Dec. 31, 2019, prior to adjustment } & 600 & \mathrm { Cr } . \
\hline \text { Net credit sales during 2019 } & 95,000 & \
\hline \text { Collections on account during 2019 } & 87,000 & \
\hline \text { Cash sales during } 2019 & 27,000 & \
\hline
\end{array}$$
-Referring to Table 9-1, if uncollectible accounts are determined by the percent-of-sales method to be 3% of net credit sales, the bad-debt expense for 2019 would be:

Accepted Answer

The bad-debt expense is calculated as 3% of net credit sales, which is $95,000 x 0.03 = $2,850.

Question 9

The allowance for doubtful accounts has a current debit balance of $2,550. Bad-debt expense is estimated to be 3% of net credit sales. If net credit sales were $250,000, which of the following would be part of the adjusting entry for bad-debt expense?

Accepted Answer

Bad-debt expense is estimated to be 3% of net credit sales. If net credit sales were $250,000, bad-debt expense would be $7,500 (0.03 x $250,000). The adjusting entry would be to debit bad-debt expense for $7,500 and credit allowance for doubtful accounts for $7,500.

Question 10

Table 9-5
The Ritchie Company gathered the following information pertaining to its year ended December 31, 2019, prior to any adjustments:
 $$\begin{array} { | l | r | r | } 
\hline \text { Net credit sales for the year } & \$ 780,000 & \
\hline \text { Accounts receivable, Dec. } 31,2019 & 170,000 & \
\hline \text { Allowance for doubtful accounts, } & & \
\text { December } 31,2019 & 3,200 & \mathrm { Cr } . \
\hline & & \
\hline
\end{array}$$ Aging of accounts receivable at December 31, 2019:
 $$\begin{array} { | l | r | } 
\hline 1 - 30 \text { days } & \$ 95,000 \
\hline 31 - 60 \text { days } & 38,000 \
\hline 61 - 90 \text { days } & 23,000 \
\hline \text { Over } 90 \text { days } & 14,000 \
\hline \text { Total } & \$ 170,000 \
\hline
\end{array}$$
-Refer to Table 9-5. Assume Ritchie uses the aging-of-accounts-receivable method for estimating uncollectible accounts. Ritchie estimates that uncollectible accounts will be aged as follows: 2% for 1-30 days; 4% for 31-60 days; 10% for 61-90 days; and 25% for over 90 days. The balance in allowance for doubtful accounts after the adjusting entry for uncollectible accounts will be:

Accepted Answer

The answer of Table 9-5
The Ritchie Company gathered the following...

Question 11

Table 9-5
The Ritchie Company gathered the following information pertaining to its year ended December 31, 2019, prior to any adjustments:
 $$\begin{array} { | l | r | r | } 
\hline \text { Net credit sales for the year } & \$ 780,000 & \
\hline \text { Accounts receivable, Dec. } 31,2019 & 170,000 & \
\hline \text { Allowance for doubtful accounts, } & & \
\text { December } 31,2019 & 3,200 & \mathrm { Cr } . \
\hline & & \
\hline
\end{array}$$ Aging of accounts receivable at December 31, 2019:
 $$\begin{array} { | l | r | } 
\hline 1 - 30 \text { days } & \$ 95,000 \
\hline 31 - 60 \text { days } & 38,000 \
\hline 61 - 90 \text { days } & 23,000 \
\hline \text { Over } 90 \text { days } & 14,000 \
\hline \text { Total } & \$ 170,000 \
\hline
\end{array}$$
-Refer to Table 9-5. Assume Ritchie uses the percent-of-sales method for estimating uncollectible accounts. Ritchie estimates that bad-debt expense will be 1.3% of net credit sales. After the adjustment for uncollectible accounts is made, the net realizable value of accounts receivable will be:

Accepted Answer

The answer of Table 9-5
The Ritchie Company gathered the following...

Question 12

When a note matures, the payee should record:

Accepted Answer

When a note matures, the payee records interest revenue because they earn interest on the amount lent to the payer.

Question 13

Fresh Dairy Company uses the allowance method and estimates uncollectible accounts based on a percent of sales. Net credit sales represent 75% of total sales. Total sales for 2019 were $840,000. Historically, 1/2 of 1% of net credit sales have been uncollectible. At December 31, 2019, the balance in allowance for doubtful accounts is a $120 credit. What is the balance in bad-debt expense after the adjusting entry is made?

Accepted Answer

Net credit sales are 75% of $840,000, which is $630,000. The estimated uncollectible amount is 0.5% of $630,000, which is $3,150.

Question 14

Eyewear Unlimited has accounts receivable of $16,000 and an allowance for doubtful accounts with a credit balance of $1,700 before a specific account of $60 is written off. What were net accounts receivable before and after the write-off?

Accepted Answer

Before the write-off, net accounts receivable is $16,000 - $1,700 = $14,300. After writing off $60, the allowance for doubtful accounts decreases by $60, but net accounts receivable remains $14,300 because both accounts receivable and allowance decrease by the same amount.

Question 15

The current credit balance in allowance for doubtful accounts before adjustment is $658. An aging schedule reveals $3,500 of uncollectible accounts. The journal entry for estimated uncollectible accounts should be prepared for:

Accepted Answer

The correct journal entry amount is $2,842, which is the difference between the required balance ($3,500 from the aging schedule) and the existing credit balance in the allowance account ($658). This adjustment ensures the allowance reflects the estimated uncollectible accounts accurately.

Question 16

Using the balance-sheet approach to estimate uncollectibles, accounts that are 90 days old are:

Accepted Answer

Accounts that are 90 days old are generally considered less likely to be collected than accounts that are only 30 days old, as the likelihood of collection typically decreases as accounts become older.

Question 17

Table 9-5
The Ritchie Company gathered the following information pertaining to its year ended December 31, 2019, prior to any adjustments:
 $$\begin{array} { | l | r | r | } 
\hline \text { Net credit sales for the year } & \$ 780,000 & \
\hline \text { Accounts receivable, Dec. } 31,2019 & 170,000 & \
\hline \text { Allowance for doubtful accounts, } & & \
\text { December } 31,2019 & 3,200 & \mathrm { Cr } . \
\hline & & \
\hline
\end{array}$$ Aging of accounts receivable at December 31, 2019:
 $$\begin{array} { | l | r | } 
\hline 1 - 30 \text { days } & \$ 95,000 \
\hline 31 - 60 \text { days } & 38,000 \
\hline 61 - 90 \text { days } & 23,000 \
\hline \text { Over } 90 \text { days } & 14,000 \
\hline \text { Total } & \$ 170,000 \
\hline
\end{array}$$
-Referring to Table 9-5, assume Ritchie uses the percent-of-sales method for estimating uncollectible accounts. Ritchie estimates that uncollectible accounts will be 1.75% of net credit sales. The adjusting entry to record bad-debt expense for the year is:

Accepted Answer

The correct adjusting entry for bad-debt expense using the percent-of-sales method is calculated as 1.75% of net credit sales ($780,000), which equals $13,650. This amount is debited to Bad-Debt Expense and credited to Allowance for Doubtful Accounts, not directly to Accounts Receivable.

Question 18

Table 9-1
Ringo Company had the following information relating to net credit sales for 2019:
 $$\begin{array} { | c | r | c | } 
\hline \text { Accounts receivable, Jan. 1, 2019 } & \$ 18,000 & \text { Dr. } \
\hline \text { Allowance for doubtful accounts, } & & \
\text { Dec. 31, 2019, prior to adjustment } & 600 & \mathrm { Cr } . \
\hline \text { Net credit sales during 2019 } & 95,000 & \
\hline \text { Collections on account during 2019 } & 87,000 & \
\hline \text { Cash sales during } 2019 & 27,000 & \
\hline
\end{array}$$
-Referring to Table 9-1, if uncollectible accounts are determined by the aging of receivables method to be $3,040, the bad-debt expense for 2019 would be:

Accepted Answer

The bad-debt expense for 2019 is calculated by adjusting the Allowance for Doubtful Accounts to the required balance of $3,040. The existing credit balance is $600, so the adjustment needed is $3,040 - $600 = $2,440.

Question 19

Sports Shop reports net accounts receivables on its December 31, 2019, balance sheet at $105,460. The allowance for doubtful accounts has a normal balance of $3,200 after adjustment. What is the ending balance in the accounts receivable account?

Accepted Answer

The ending balance in the accounts receivable account before adjusting for the allowance for doubtful accounts is $105,460. The allowance for doubtful accounts is $3,200. To find the ending balance in the accounts receivable account, you add the allowance for doubtful accounts to the net accounts receivables reported, which is $105,460 + $3,200 = $108,660.

Question 20

Table 9-1
Ringo Company had the following information relating to net credit sales for 2019:
 $$\begin{array} { | c | r | c | } 
\hline \text { Accounts receivable, Jan. 1, 2019 } & \$ 18,000 & \text { Dr. } \
\hline \text { Allowance for doubtful accounts, } & & \
\text { Dec. 31, 2019, prior to adjustment } & 600 & \mathrm { Cr } . \
\hline \text { Net credit sales during 2019 } & 95,000 & \
\hline \text { Collections on account during 2019 } & 87,000 & \
\hline \text { Cash sales during } 2019 & 27,000 & \
\hline
\end{array}$$
-Referring to Table 9-1, if uncollectible accounts are determined by the aging of receivables to be $3,450, the amount of net accounts receivable after adjusting entries for 2019 would be:

Accepted Answer

The answer of Table 9-1
Ringo Company had the following information...

Quiz 9: Receivables

Under the allowance method, if uncollectible account write-offs during the year exceed the allowance amount, the balance in allowance for doubtful accounts at year end prior to adjustment:

Accounts receivable has a debit balance of $5,000, and the allowance for doubtful accounts has a credit balance of $440. A specific account of $160 is written off. What is the amount of net receivables after the write-off?

The current credit balance in allowance for doubtful accounts before adjustment is $658. An aging schedule reveals $3,500 of uncollectible accounts. The ending balance in allowance for doubtful accounts should be:

The allowance for doubtful accounts has a current debit balance of $2,550. Bad-debt expense is estimated to be 3% of net credit sales. If net credit sales were $250,000, which of the following would be part of the adjusting entry for bad-debt expense?

When a note matures, the payee should record:

Eyewear Unlimited has accounts receivable of $16,000 and an allowance for doubtful accounts with a credit balance of $1,700 before a specific account of $60 is written off. What were net accounts receivable before and after the write-off?

The current credit balance in allowance for doubtful accounts before adjustment is $658. An aging schedule reveals $3,500 of uncollectible accounts. The journal entry for estimated uncollectible accounts should be prepared for:

Using the balance-sheet approach to estimate uncollectibles, accounts that are 90 days old are:

Sports Shop reports net accounts receivables on its December 31, 2019, balance sheet at $105,460. The allowance for doubtful accounts has a normal balance of $3,200 after adjustment. What is the ending balance in the accounts receivable account?