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Accounting
Q:
The party who borrows money and signs a promissory note is referred to as the payee.
Q:
The formula for computing interest on a note is the principal of the note times the annual interest rate times time expressed in a fraction of year.
Q:
A promissory note is a written promise to pay a specified amount of money either on demand or at a definite future date.
Q:
The maturity date of a note refers to the date the note is signed.
Q:
TechCom's customer RDA paid off an $8,300 balance on its account receivable. TechCom should record the transaction as a debit to Accounts Receivable-RDA and a credit to Cash.
Q:
Companies can report a credit card expense as a discount deducted from sales or as a selling expense.
Q:
If the seller regularly offers customers such terms, installment accounts receivable are classified as current assets, even though the installment period is more than one year.
Q:
If a credit card sale is made, the seller will debit either Cash or Accounts Receivable when the sale occurs depending on the sellers arrangements with the credit card provider.
Q:
If a customer owes interest on accounts receivable, the company should debit Interest Revenue and credit Accounts Receivable.
Q:
As long as a company accurately records total credit sales information, it is not necessary to have separate accounts for specific customers.
Q:
Credit sales are recorded by crediting an account receivable for the specific customer who is making the purchase.
Q:
Accounts receivable occur from credit sales to customers.
Q:
When the maker of a note is unable or refuses to pay at maturity, the note is said to be ___________________.
Q:
Myrex Corporation purchased $4,000 in merchandise from TechCom. Myrex signed a 60-day, 10%, $4,000 promissory note. TechCom should record the sale with a journal entry debiting ____________________ for $________ and crediting __________________ for $________.
Q:
The _______________________ method uses both past and current receivables to estimate the allowance amount and assumes that the longer an amount is past due, the more likely it is to be uncollectible.
Q:
The ________________________ methods use balance sheet relationships to estimate bad debts mainly the relation between accounts receivable and the allowance amount.
Q:
The _________________________ method uses income statement relationships to estimate bad debts and is based on the idea that a given percent of a company's credit sales for a period are uncollectible.
Q:
Writing off an uncollectible account receivable when the allowance method of accounting for uncollectible accounts is used, a company should debit _______________________ and credit accounts receivable.
Q:
____________________________ are amounts owed by customers from credit sales where payment is required in periodic amounts over an extended time period.
Q:
The ________________ method of accounting for bad debts records the loss from an uncollectible account receivable at the time it is determined to be uncollectible (and not before).
Q:
Converting receivables to cash before they are due is usually done by either (1) _______________________ or (2) ________________________________.
Q:
The ____________________ of a note is the day the principle plus interest of a note must be repaid.
Q:
____________________ is the charge for using (not paying) money until a later date.
Q:
The person to whom a note is payable to is known as the ______________.
Q:
A ____________________ is a signed promise to pay a specified amount of money either on demand or at a definite future date.
Q:
A supplementary record created to maintain a separate account for each customer is called the ________________________.
Q:
December 31, 2014 Accounts Receivable
Age of Accounts
Receivable
Expected Percent Uncollectible $720,000
Not yet due
05
% 252,000
1 to 30 days past due
1.80 49,600
31 to 60 days past due
6.30 14,100
61 to 90 days past due
31.75 2,850
Over 90 days past due
66.00 Assuming the company uses the percent of accounts receivable method, determine the amount that should be recorded for bad debt expense on December 31, 2014.
Q:
Corona Company has credit sales of $4.60 million for year 2014. The company estimates that 2% of sales will be uncollectible. On December 31, 2014, the companys Allowance for Doubtful Accounts has an unadjusted credit balance of $13,164. Corona prepares a schedule of its December 31, 2014, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here: December 31, 2014 Accounts Receivable Age of Accounts Receivable Expected Percent Uncollectible $720,000 Not yet due 05 % 252,000 1 to 30 days past due 1.80 49,600 31 to 60 days past due 6.30 14,100 61 to 90 days past due 31.75 2,850 Over 90 days past due 66.00 Assuming the company used the percent of sales method determine the amount that should be recorded for bad debt expense on December 31, 2014.
Q:
Corona Company has credit sales of $4.60 million for year 2014. On December 31, 2014, the companys Allowance for Doubtful Accounts has an unadjusted credit balance of $13,164. Corona prepares a schedule of its December 31, 2014, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here: December 31, 2014 Accounts Receivable Age of Accounts Receivable Expected Percent Uncollectible $720,000 Not yet due 05 % 252,000 1 to 30 days past due 1.80 49,600 31 to 60 days past due 6.30 14,100 61 to 90 days past due 31.75 2,850 Over 90 days past due 66.00 Assuming the company used the aging of accounts receivable method, determine the amount that should be recorded for bad debt expense on December 31, 2014.
Q:
The following information is from the annual financial statements of Duke Company. 2014
2013
2012 Net sales
$385,000
$308,000
$255,000 Accounts receivable, net (year-end)
57,500
54,000
44,700 Calculate the accounts receivable turnover ratio for 2013 and 2014.
Q:
Prepare general journal entries for the following transactions of this company for the current year: Dec. 13
Accepted a $8,000, 60-day, 9% note dated December 13 in granting Faith Renee a time extension on her past-due account receivable. 31
Prepared an adjusting entry to record the accrued interest on the Renee note.
Q:
Prepare general journal entries for the following transactions of this company for the current year: Apr. 25
Sold $4,500 of merchandise to CBC Corp., receiving a 10%, 60-day, $4,500 note receivable. June 24
The note of CBC Corp., received on April 25 was dishonored.
Q:
Cairo Co. uses the allowance method of accounting for uncollectible accounts. Cairo Co. accepted a $5,000, 12%, 90-day note dated May 16, from Alexandria Co. in exchange for its past-due account receivable. Make the necessary general journal entries for Cairo Co. on May 16 and the August 14 maturity date, assuming that the:
a. Note is held until maturity and collected in full at that time.
b. Note is dishonored; the amount of the note and its interest are written off as uncollectible.
Q:
Prepare general journal entries for the following transactions of Viking Company, assuming they use the allowance method to account for uncollectible accounts. Apr
1
Sold $2,500 of merchandise to Arthur Co., receiving an 8%, 90-day, $2,500 note. 15
Wrote off $1,500 owed by Network Co. 30
Received a $6,000, 5%, 30-day note receivable from Calvin Co. as exchange for its $6,000 account receivable. May
30
The note received from Calvin on April 30 was collected in full. June
30
Arthur Co. was unable to pay the note on the due date. July
15
Network Co. paid $1,000 of the amount written off on April 15.
Q:
The following series of transactions occurred during 2014 and 2015 when Linwood Co. sold merchandise to John Moore. Linwood's annual accounting period ends on December 31. 10/01/14
Sold $12,000 of merchandise to John Moore, terms 2/10, n/30. 11/15/14
Moore reports that he cannot pay the account until early next year. He agrees to exchange the account for a 120-day, 12% note receivable. 12/31/14
Prepared the adjusting journal entry to record accrued interest on the note. 03/15/15
Linwood receives a check from Moore for the maturity value (with interest) of the note. 03/22/15
Linwood receives notification that Moores check is being returned for non-sufficient funds (NSF). 12/31/15
Linwood writes off Moores account as uncollectible. Prepare Linwood Co.'s journal entries to record the above transactions assuming they use the allowance method of accounting for uncollectible accounts.
Q:
A company that uses the allowance method to account for its bad debts had credit sales of $740,000 in 2013, including a $720 sale to Linda Paul. On December 31, 2013, the company estimated its bad debts at 1.5% of its credit sales. On June 1, 2014, the company wrote off as uncollectible the $720 account of Linda Paul; and on December 21, 2014, Linda Paul unexpectedly paid her account in full. Prepare the necessary journal entries (a) on December 31, 2013, to reflect the estimate of bad debts expense; (b) on June 1, 2014, to write off the bad debt; and (c) on December 21, 2014, to record the unexpected collection.
Q:
Each December 31, Davis Company ages its accounts receivable to determine the amount of its adjustment for bad debts. At the end of the current year, management estimated that $16,900 of the accounts receivable balances would be uncollectible. The Allowance for Doubtful Accounts account had a debit balance of $3,200 before any year-end adjustment for bad debts. Prepare the adjusting journal entry that Davis Company should make on December 31 of the current year to estimate bad debts expense.
Q:
Assume that this company's bad debts are estimated and recorded as 1.5% of credit sales.
On December 31, of the current year, a company's unadjusted trial balance revealed the following: accounts receivable of $185,600; sales revenue of $1,280,000; (75% were on credit) and allowance for doubtful accounts of $1,600 (credit balance).
a. Show how accounts receivable and the allowance for doubtful accounts would appear on the balance sheet after adjustment.
b. Prepare the entry to write off a $1,500 account receivable on January 1 of the next year.
c. Show how accounts receivable and the allowance for doubtful accounts would appear on the balance sheet immediately after writing off the account in part 2.
Q:
Prepare the adjusting journal entry to record the estimate for bad debts assuming: On December 31 of the current year, a company's unadjusted trial balance revealed the following: accounts receivable of $185,600; sales revenue of $1,280,000; (75% were on credit); and allowance for doubtful accounts of $1,600 (credit balance). 1. Bad debts expense is estimated to be 1.5% of credit sales.
2. 6% of the accounts receivable balance is assumed to be uncollectible.
Q:
A company had the following items and amounts in its unadjusted trial balance as of December 31 of the current year: Debit
Credit Cash sales $ 88,000 Credit sales 275,000 Accounts receivable
$96,000 Allowance for doubtful accounts 1,000 Prepare the adjusting entry to estimate bad debts under each of the following separate situations.
a. Bad debts are estimated to be 2.5% of credit sales.
b. An aging analysis estimates that 8% of the outstanding accounts receivable will be uncollectible.
Q:
At December 31 of the current year, a company reported the following:
Total sales for the current year: $780,000, includes $160,000 in cash sales.
Accounts receivable balance at Dec. 31, current year: $190,000.
Bad debts written off during the current year: $6,800.
Balance of allowance for doubtful accounts at January 1, current year: $8,300 credit.
Prepare the necessary adjusting entries to record bad debts expense assuming this company's bad debts are estimated to equal:
a. 1.5% of credit sales
b. 5% of accounts receivable
Q:
Welles Company uses the direct write-off method of accounting for uncollectible accounts receivable. On December 6, 2013, Welles sold $6,300 of merchandise to the Fleming Company. On August 8, 2014, after numerous attempts to collect the account, Welles determined that the $6,300 account of the Fleming Company was uncollectible.
a. Prepare the general journal entries required to record the transactions on August 8, 2014.
b. Assuming that the $6,300 is material, explain how the direct write-off method violates the matching principle in this case.
Q:
Timmons Company had a January 1 credit balance in its Allowance for Doubtful Accounts of $7,000 for the current year. The following transactions and events affected the Allowance for Doubtful Accounts during the current year: Apr. 15
Bards account receivable of $5,700 was deemed uncollectible. July 1
Drake paid the full amount of a previously written-off account receivable. This receivable of $2,300 had been written off in the prior year. Dec. 31
Bad debts expense of $7,500 was recorded. What amount should appear in the allowance for doubtful accounts in the December 31 balance sheet for the current year?
Q:
A company reports the following results in its financial statements: Year 3
Year 2
Year 1 Net sales
$2,500,000
$2,050,000
$1,900,000 Accounts receivable, ending balance
175,000
167,000
165,000 Calculate this company's accounts receivable turnover for year 2 and year 3. Compare these two results and give a possible explanation for any significant change.
Q:
Tecom had net sales of $315,000 and average accounts receivable of $75,600. Its competitor, ZCom, had net sales of $299,000 and average accounts receivables of $81,350. Calculate the accounts receivable turnover for both companies. Which company is doing a better job of managing its accounts receivables?
Q:
Hasbro had net sales of $7,875 and average accounts receivables of $1,350. Calculate Hasbro's accounts receivable turnover:
Q:
ABC Co. sold $80,000 of accounts receivable to First Bank and incurred a 2% factoring fee. Prepare the journal entry for ABC Co. to record the sale.
Q:
On May 31, a company had a balance in its accounts receivable of $103,895. Record the company's following transactions for June: June 2
Sold merchandise on account, $14,000. June 8
Sold $15,000 worth of accounts receivable to First Bank. First Bank charged a 3% factoring fee. June 20
Borrowed $30,000 cash from First Bank, pledging $31,500 worth of accounts receivable as collateral for the loan.
Q:
If a 60-day note receivable is dated September 22, what is the maturity date of the note?
Q:
If a 90-day note receivable is dated June 12, what is the maturity date of the note?
Q:
Calculate the total amount of interest that would be owed on a $9,000, 60-day, 9% note receivable.
Q:
What is the amount of interest that is due on a $36,000, 3-month, 4% note receivable?
Q:
What is the maturity date of a six-month note receivable dated February 5?
Q:
Outdoors Unlimited accepts the Explorer credit card from its customers. Explorer charges a 3.5% service fee and pays Outdoors Unlimited the amount net of Explorer charges once a month. During February, Outdoors Unlimited sold $27,000 worth of merchandise to customers using the Explorer charge card. On February 28, Outdoor Unlimited sent the $27,000 worth of credit card receipts to Explorer. On March 4, Outdoors Unlimited received cash proceeds from Explorer for the February credit sales less the service charge. Prepare the general journal entries to record February sales and the March 4 cash receipt.
Q:
Tecom accepts the NOVA credit card for credit card sales. Tecom sends credit card receipts to NOVA on a weekly basis. NOVA charges Tecom a 2% fee. Tecom usually receives payment from NOVA within a week. Prepare entries in general journal form to record the following transactions of Tecom involving the NOVA credit card. March 11
Sold merchandise for $4,500 to customers who use the NOVA credit card and deposited the credit card receipts. March 20
Received cash proceeds less the service charge for the March 14 deposit to NOVA.
Q:
Crystal Products allows customers to use bank credit cards to charge purchases. The bank used by Crystal Products processes all bank credit cards in exchange for a 3% processing fee. All credit card receipts deposited are credited to the company account on the day of deposit. Assume that on January 18, Crystal Products sold and deposited $19,000 worth of bank credit card receipts. Prepare the general journal entry to record this transaction.
Q:
A company allows its customers to use bank credit cards to charge purchases. When customers use the credit cards, the net amount is deposited in the company's checking account. The company also is charged a 2.5% service charge for these credit card sales. Assume that on April 13, the company sold $25,000 worth of merchandise to customers who used credit cards. Prepare the company's journal entry to record the credit card sales for April 13 assuming the company deposited the receipts that same day.
Q:
How does Jarrett Pumphrey of ClearCorrect, view decisions involving sales on credit?
Q:
Explain how to record the receipt of a note receivable.
Q:
Explain the basic differences between estimating the amount of uncollectible accounts using the percent of sales method and the accounts receivable method.
Q:
How are the direct write-off method and the allowance method applied in accounting for uncollectible accounts receivables?
Q:
What is the accounts receivable turnover ratio? How is it calculated? How is it used to assess financial condition?
Q:
Explain the options a company has when converting its receivables to cash.
Q:
Define a note receivable and explain how interest is calculated on a short-term note receivable.
Q:
Describe how accounts receivable arise and how they are accounted for, including the use of a subsidiary ledger and an allowance account.
Q:
Match each of the following terms with the appropriate definition: 1. The accounting constraint that states that an amount can be ignored if its effect on the financial statements is not important to their users. Accounts receivable turnover 2. Amounts owed by customers from credit sales for which payment is required in periodic payments over an extended period of time. Installment accounts receivable 3. A buyer of accounts receivable who charges the seller a fee and then receives cash from the receivables as they come due. Materiality constraint 4. A method of accounting for bad debts that matches the estimated loss from uncollectible accounts receivable against the sales they helped to produce. Dishonoring a note 5. The accounting principle that requires the financial statements (including the notes) to report all relevant information about operations and financial condition. Allowance method 6. A method of accounting for bad debts that records the loss from an uncollectible account receivable when it is determined to be uncollectible. Factor 7. One who signs a note and promises to pay it at maturity. Full disclosure principle 8. The amount that the signer of a note agrees to pay back when the note matures, not including interest. Maker of a note 9. Refers to a note makers inability or refusal to pay the note at maturity. Direct write-off 10. A measure of both the quality and liquidity of accounts receivable. It indicates how often, on average, receivables are received and collected during the period. Principal of a note
Q:
On November 15, 2013, Betty Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $138,460. The note is due in 90 days and has an interest rate of 7.5%. What is the appropriate journal entry to record at maturity?
A. Cash
138,460.00 Notes Receivable 138,460.00 B. Notes Receivable
138,460.00 Accounts Receivable 138,460.00 C. Notes Receivable
138,460.00 Interest Revenue
2,596.13 Cash 141,056.13 D. Cash
138,460.00 Interest Receivable
1,298.06 Notes Receivable 139,758.06 E. Cash
141,056.12 Interest Revenue 1,298.06 Interest Receivable 1,298.06 Notes Receivable 138,460.00
Q:
On November 15, 2013, Betty Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $138,460. The note is due in 90 days and has an interest rate of 7.5%. What would be the amount required for the December 31, 2013, adjusting journal entry?
A. $35,913.06
B. $34,615.00
C. $10,384.50
D. $1,298.06
E. $2,596.13
Q:
On August 1, 2013, Ace Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $123,965. The note is due in 90 days and has an interest rate of 8%. What would be the appropriate journal entry to record the receipt of cash at the maturity date?
A. Cash
123,965.00 Notes Receivable 123,965.00 B. Notes Receivable
123,965.00 Accounts Receivable 123,965.00 C. Notes Receivable
123,965.00 Interest Revenue
2,479.30 Cash 126,444.30 D. Cash
123,965.00 Interest Receivable
2,479.30 Notes Receivable 126,444.30 E. Cash
126,444.30 Interest Revenue 2,479.30 Notes Receivable 123,965.00
Q:
On August 1, 2013, Ace Corporation accepted a note receivable in place of an outstanding accounts receivable in the amount of $123,965. The note is due in 90 days and has an interest rate of 8%. What would be the total amount collected at the maturity date? A. $123,965.00
B. $2,479.30
C. $126,444.30
D. $121,485.70
E. $133,882.20
Q:
The following information is from the annual financial statements of Nancy Company. 2013
2012
2011 Net sales
$307,000
$238,000
$285,000 Accounts receivable, net (year-end)
47,900
45,700
42,400 What is the accounts receivable turnover ratio for 2012?
A. 6.41
B. 4.97
C. 6.72
D. 5.40
E. 5.20
Q:
The following information is from the annual financial statements of Nancy Company. 2013
2012
2011 Net sales
$307,000
$238,000
$285,000 Accounts receivable, net (year-end)
47,900
45,700
42,400 What is the accounts receivable turnover ratio for 2013?
A. 6.41
B. 4.97
C. 6.72
D. 5.40
E. 6.56
Q:
Vine Company began operations on January 1, 2013. During its first year, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows: a.
Sold $1,348,300 of merchandise (that had cost $983,600) on credit, terms n/30. b.
Wrote off $19,400 of uncollectible accounts receivable. c.
Received $666,100 cash in payment of accounts receivable. d.
In adjusting the accounts on December 31, the company estimated that 2.90% of accounts receivable will be uncollectible. What is the amount required for the adjusting journal entry to record bad debt expense?
A. $18,644.90
B. $38,621.20
C. $19,783.80
D. $19,221.20
E. $19,400.20
Q:
Chiller Company has credit sales of $5.60 million for year 2013. Chiller estimates that 1.32% of the credit sales will not be collected. Historically, 4% of outstanding accounts receivable is uncollectible. On December 31, 2013, the companys Allowance for Doubtful Accounts has an unadjusted debit balance of $3,561. Chiller prepares a schedule of its December 31, 2010, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here: December 31, 2013 Accounts Receivable Age of Accounts Receivable Expected Percent Uncollectible $1,095,000 Not yet due 85 % 322,550 1 to 30 days past due 1.42 84,700 31 to 60 days past due 7.60 50,420 61 to 90 days past due 42.50 12,500 Over 90 days past due 81.00 Assuming the company uses the aging of accounts receivable method, what is the amount that Chiller will enter as the Bad Debt Expense in the December 31 adjusting journal entry? A. $59,045.80
B. $51,878.41
C. $48,317.41
D. $55,439.41
E. $66,167.80
Q:
Chiller Company has credit sales of $5.60 million for year 2013. Accounts Receivable total $1,565,170 and the company estimates that 1.32% of the credit sales will not be collected. Historically, 4% of outstanding accounts receivable is uncollectible. On December 31, 2013, the companys Allowance for Doubtful Accounts has an unadjusted credit balance of $3,561. Chiller prepares a schedule of its December 31, 2013, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here: December 31, 2013 Accounts Receivable Age of Accounts Receivable Expected Percent Uncollectible $1,095,000 Not yet due 85 % 322,550 1 to 30 days past due 1.42 84,700 31 to 60 days past due 7.60 50,420 61 to 90 days past due 42.50 12,500 Over 90 days past due 81.00 Assuming the company uses the percent of accounts receivable method, what is the amount that Chiller will enter as the Bad Debt Expense in the December 31 adjusting journal entry? A. $59,045.80
B. $51,878.41
C. $48,317.41
D. $62,606.80
E. $66,167.80
Q:
December 31, 2013 Accounts Receivable
Age of Accounts
Receivable
Expected Percent Uncollectible $1,095,000
Not yet due
85
% 322,550
1 to 30 days past due
1.42 84,700
31 to 60 days past due
7.60 50,420
61 to 90 days past due
42.50 12,500
Over 90 days past due
81.00 Assuming the company uses the percent of sales method, what is the amount that Chiller will enter as the Bad Debt Expense in the December 31 adjusting journal entry?
A. $55,439.41
B. $73,920.00
C. $48,317.41
D. $70,359.00
E. $66,167.80
Q:
Acme Company has credit sales of $3.10 million for year 2013. Accounts Receivable total $947,360 and the company estimates that 2% of accounts receivable will remain uncollectible. Historically, .9% of sales have been uncollectible. On December 31, 2013, the companys Allowance for Doubtful Accounts has an unadjusted credit balance of $2,575. Acme prepared a schedule of its December 31, 2013, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here: December 31, 2010 Accounts Receivable Age of Accounts Receivable Expected Percent Uncollectible $620,000 Not yet due 05 % 248,000 1 to 30 days past due 1.80 49,600 31 to 60 days past due 6.30 24,800 61 to 90 days past due 31.75 4,960 Over 90 days past due 66.00 Assuming the company uses the percent of accounts receivable method, what is the amount that Acme will enter as the Bad Debt Expense in the December 31 adjusting journal entry? A. $18,947.20
B. $16,372.20
C. $23,024.40
D. $27,900.00
E. $21,522.20
Q:
Temper Company has credit sales of $3.10 million for year 2013. Accounts Receivable total $947,360 and the company estimates that 2% of accounts receivable will remain uncollectible. Historically, .9% of sales have been uncollectible. On December 31, 2013, the companys Allowance for Doubtful Accounts has an unadjusted debit balance of $2,575. Temper prepared a schedule of its December 31, 2013, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here: December 31, 2013 Accounts Receivable Age of Accounts Receivable Expected Percent Uncollectible $620,000 Not yet due 05 % 248,000 1 to 30 days past due 1.80 49,600 31 to 60 days past due 6.30 24,800 61 to 90 days past due 31.75 4,960 Over 90 days past due 66.00 Assuming the company uses the percent of accounts receivable method, what is the amount that Temper will enter as the Bad Debt Expense in the December 31 adjusting journal entry? A. $18,947.20
B. $16,372.20
C. $23,024.40
D. $27,900.00
E. $21,522.20
Q:
Temper Company has credit sales of $3.10 million for year 2013. Temper estimates that .9% of the credit sales will not be collected. On December 31, 2013, the companys Allowance for Doubtful Accounts has an unadjusted credit balance of $2,222. Assuming the company uses the percent of sales method, what is the amount that Temper will enter as the Bad Debt Expense in the December 31 adjusting journal entry?
A. $25,246.40
B. $27,468.40
C. $23,024.40
D. $27,900.00
E. $24,420.40
Q:
Temper Company has credit sales of $3.10 million for year 2013. Temper estimates that .9% of the credit sales will not be collected. On December 31, 2013, the companys Allowance for Doubtful Accounts has an unadjusted credit balance of $2,222. Temper prepares a schedule of its December 31, 2013, accounts receivable by age. Based on past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here: December 31, 2013 Accounts Receivable Age of Accounts Receivable Expected Percent Uncollectible $620,000 Not yet due 05 % 248,000 1 to 30 days past due 1.80 49,600 31 to 60 days past due 6.30 24,800 61 to 90 days past due 31.75 4,960 Over 90 days past due 66.00 Assuming the company uses the aging of Accounts Receivable method, what is the amount that Temper will enter as the Bad Debt Expense in the December 31 adjusting journal entry? A. $25,246.40
B. $27,468.40
C. $23,024.40
D. $27,900.00
E. $24,420.40