Valix Finacc vol 1 Problem 5-10

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 5-10

a.  Credit sales (75% x 5,000,000)                                                                            3,750,000

      Doubtful accounts (2% x 3,750,000)                                                                       75,000

      Doubtful accounts                                                                           75,000

            Allowance for doubtful accounts                                                                   75,000

b.  Doubtful accounts (1% x 5,000,000)                                                   50,000

            Allowance for doubtful accounts                                                                   50,000

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c.  Required allowance                                                                                              80,000

     Less: Credit balance of allowance                                                                       20,000

     Doubtful accounts expense                                                                                  60,000

     Doubtful accounts                                                             60,000

            Allowance for doubtful accounts                                                                  60,000

d. Required allowance (10% x 500,000)                                                                      50,000

     Less: Credit balance of allowance                                                                       20,000

     Doubtful accounts expense                                                                                  30,000

     Doubtful accounts                                                             30,000

            Allowance for doubtful accounts                                                                 30,000