Chapter 1 Problem 5-13
Requirement a
1. Accounts receivable 7,000,000
Sales 7,000,000
2. Cash 2,450,000
Sales discount 50,000
Accounts receivable(2,450,000/98%) 2,500,000
3. Cash 3,900,000
Accounts receivable 3,900,000
4. Allowance for doubtful accounts 30,000
Accounts receivable 30,000
5. Accounts receivable 10,000
Allowance for doubtful accounts 10,000
Cash 10,000
Accounts receivable 10,000
6. Sales return 70,000
Accounts receivable 70,000
Requirement b
Doubtful accounts 40,000
Allowance for doubtful accounts 40,000
Rate = 40,000/1,000,000 = 4%
Allowance for doubtful accounts – December 31 (4% x 1,500,000) 60,000
Less: Allowance before adjustment 20,000
Doubtful accounts expense 40,000
Requirement c
Accounts receivable – December 31 1,500,000
Allowance for doubtful accounts ( 60,000)
Net realizable value 1,440,000
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