111) StorageTek Corporation gathered the following information from its accounting records for the year ended December 31, 2010, prior to adjustment:
Net credit sales for the year$1,150,000
Accounts Receivable (Dec. 31, 2010)93,000
Allowance for Uncollectible Accounts, prior to
adjustment (Dec. 31, 2010) 6,000 (debit balance)
StorageTek Corporation uses the allowance method of accounting for bad debts and estimates bad debts at 2.5% of net credit sales.
Required:
a.Prepare the adjusting entry on December 31, 2010.
b.Determine the balance in the Allowance for Uncollectible Accounts account after the adjusting entry is recorded.
c.Show how the receivables would be reported on the December 31, 2010, balance sheet for StorageTek Corporation.
112) Optura Computer Company uses the allowance method to account for bad debts. Indicate the effect of each of the following transactions on gross Accounts Receivable, the Allowance for Uncollectible Accounts, net Accounts Receivable, and Uncollectible-Accounts Expense. Use (+) for increase, (-) for decrease, and (0) for no effect.
GrossAllowance for NetUncollectible-
AccountsUncollectible AccountsAccounts
ReceivableAccountsReceivableExpense
a.A customer pays
his account
receivable.________________________________
b.1% of $500,000 in
sales is estimated to
be uncollectible.________________________________
c.5% of $100,000 in
Accounts Receivable
is estimated to be
uncollectible (the
balance in allowance
for uncollectible
accounts is a debit
of $400.________________________________
d.An account
receivable is
reinstated.________________________________
113) The December 31, 2011 unadjusted trial balance of Eel Creek Ltd. (Eel) disclosed the following balances:
Accounts receivable$400,000
Allowance for doubtful accounts 24,000 cr.
Net Credit Sales 1,400,000
Additionally, the firm has given up trying to collect on $19,000 from a customer who recently declared bankruptcy. Eel's management has not yet written off the amount but intends to do so before the company's books are closed for the year. The firm does not use the direct write-off method to estimate bad debt expense.
Provide the entry for the write-off.