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Accounting-Singletary Company had the following select transactions?
6. Singletary Company had the following select transactions.
Apr. 1, 2010 Accepted Wilson Company's 1-year, 12% note in settlement of a $20,000 account receivable.
July 1, 2010 Loaned $25,000 cash to Richard Dent on a 9-month, 10% note.
Dec. 31, 2010 Accrued interest on all notes receivable.
Apr. 1, 2011 Received principal plus interest on the Wilson note.
Apr. 1, 2011 Richard Dent dishonored its note; Singletary expects it will eventually collect.
Instructions
Prepare journal entries to record the transactions. Singletary prepares adjusting entries once a year on December 31. (For multiple debit/credit entries, list amounts from largest to smallest eg 10, 5, 3, 2.)
7. Wall Inc. uses the allowance method to estimate uncollectible accounts receivable. The company produced the following aging of the accounts receivable at year end.
Number of Days Outstanding
Total 0-30 31-60 61-90 91-120 Over 120
Accounts receivable $200,000 $77,000 $46,000 $39,000 $23,000 $15,000
% uncollectible 2% 5% 8% 10% 15%
Calculate the total estimated bad debts based on the above information
Number of Days Outstanding
Total 0-30 31-60 61-90 91-120 Over 120
Accounts receivable $200,000 $77,000 $46,000 $39,000 $23,000 $15,000
% uncollectible 2% 5% 8% 10%
a) Calculate Estimated bad debts for above.
b) Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in the question above. Assume the current balance in Allowance for Doubtful Accounts is a $8,000 debit.
c) Of the above accounts, $5,000 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account.
D) The company collects $5,000 subsequently on a specific account that had previously been determined to be uncollectible in the question above. Prepare the journal entry(ies) necessary to restore the account and record the cash collection.
1 Answer
- SandyLv 79 years agoFavorite Answer
6. Singletary Company
Apr. 1, 2010 Accepted Wilson Company's 1-year, 12% note in settlement of a $20,000 account receivable.
Dr Notes receivable $20,000
Cr Account receivable $20,000
July 1, 2010 Loaned $25,000 cash to Richard Dent on a 9-month, 10% note.
Dr Notes receivable $25,000
Cr Cash $25,000
Dec. 31, 2010 Accrued interest on all notes receivable.
Dr Interest receivable $1,800 ($20,000 x 12% x 9/12)
Cr Interest revenue $1,800
(To record interest on April 1 note - 9 months)
Dr Interest receivable $1,250 ($25,000 x 10% x 6/12)
Cr Interest revenue $1,250
(To record interest on July 1 note - 6 months)
You can combine the above if you wish.
Apr. 1, 2011 Received principal plus interest on the Wilson note.
Dr Cash $22,400
Cr Notes receivable $20,000
Cr Interest receivable $1,800
Cr Interest revenue $600 (Full year's interest is $2,400, less $1,800 already taken up)
Apr. 1, 2011 Richard Dent dishonored its note; Singletary expects it will eventually collect.
Dr Accounts receivable $26,875
Cr Notes receivable $25,000
Cr Interest receivable $1,250
Cr Interest revenue $625 (9 mths' interest $1,875 less $1,250 already taken up)
7. Wall Inc.
Total.......... .......... ....... 0-30 .. /. 31-60 ./ . 61-90./ 91-120/ Over 120
Accounts receivable $200,000/$77,000/$46,000/$39,000/$23,000
% uncollectible .......... ....2% ./ ....5% ../ ....8% ../ ...10% ./ ...15%
Amt uncollectible ...... $4,000/ $3,850/ .$3,680./$3,900/ .$3,450 ==>total $18,880
a) Calculate the total estimated bad debts based on the above information
$18,880, as above
b)Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined in the question above. Assume the current balance in Allowance for Doubtful Accounts is a $8,000 debit
Dr Bad debts expense $26,880
Cr Allowance for Doubtful Accounts $26,880
c) Of the above accounts, $5,000 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account.
Dr Allowance for Doubtful Accounts $5,000
Cr Accounts receivable $5,000
d)The company collects $5,000 subsequently on a specific account that had previously been determined to be uncollectible in the question above. Prepare the journal entry(ies) necessary to restore the account and record the cash collection
Dr Accounts receivable $5,000
Cr Allowance for Doubtful Accounts $5,000
(to restore the account)
Dr Cash $5,000
Cr Accounts receivable $5,000
(to record the cash collection)
