P7-2 (Bad-Debt Reporting) presented below are a series of unrelated situations.
1. Halen Company’s unadjusted trial balance at December 31, 2010, included the following accounts
Debit | Credit | |
Allowance for doubtful accounts | $4,000 | |
Net sales | $1,200,000 |
Halen Company estimates its bad debt expense to be 1½% of net sales. Determine its bad debt expense for 2010.
2. An analysis and aging of Stuart Corp. Accounts receivable at December 31, 2010, disclosed the following:
Amounts estimated to be uncollectible | $180,000 |
Accounts receivable | 1,750,000 |
Allowance for doubtful accounts (per books) | 125,000 |
What is the net realizable value of Stuart’s receivables at December 31, 2010?
3. Shore Co. provides for doubtful accounts based on 3% of credit sales. The following data are available for 2010.Credit sales during 2010 | $2,400,000 |
Allowance for doubtful accounts 1/1/10 | 17,000 |
Collection of accounts written off in prior years (customer credit was reestablished) | 8,000 |
Customer accounts written off as uncollectible during 2010 | 30,000 |
What is the balance in the Allowance for Doubtful Accounts at December 31, 2010?
4. At the end of its first year of operations, December 31, 2010, Darden Inc. reported the following information.
Accounts receivable, net of allowance for doubtful accounts | $950,000 |
Customer accounts written off as uncollectible during 2010 | 24,000 |
Bad debt expense for 2010 | 84,00 |
What should be the balance in accounts receivable at December 31, 2010, before subtracting the allowance for doubtful accounts?
5. The following accounts were taken from Bullock Inc.’s trial balance at December 31, 2010.
Debit | Credit | |
Net credit sales | $750,000 | |
Allowance for doubtful accounts | $14,000 | |
Accounts receivable | 310,000 |
If doubtful accounts are 3% of accounts receivable, determined the bad debt expense to be reported for 2010.
Instructions
Answer the questions relating to each of the five independent situations are requested.
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