ABEB-12

Accounts ReceivableBeg. 71,934

Sales 499,258 479,369 Collections

91,823

or

Sales – Increase in Receivables = Cash Collections

$499,258 – ($91,823 – $71,934) = $479,369

ABEB 8-3

(a) Allowance for Doubtful Accounts........................... 4,452

Accounts Receivable....................................... 4,452

(b) (1) Before Write-Off (2) After Write-OffAccounts receivable $717,607 $713,155Allowance for doubtful

accounts 25,084 20,632

Cash realizable value $692,523 $692,523

AE 8-5

Accounts Receivable Amount % Estimated Uncollectible

Current $62,600 2 $1,252

1–30 days past due 18,400 8 1,472

31–90 days past due 14,400 31 4,464

Over 90 days past due 7,000 53 3,710

$10,898

Mar. 31 Bad Debts Expense.......................................... 8,698

Allowance for Doubtful Accounts

($10,898 – $2,200)................................ 8,698

EXERCISE 8-3

(a) Accounts Receivable............................................ 800,000

Sales......... 800,000

Cash................... 763,000

Accounts Receivable....................................... 763,000

(b) Allowance for Doubtful Accounts ........................ 7,000

Accounts Receivable ....................................... 7,000

(c) Accounts Receivable ............................................ 3,000

Allowance for Doubtful Accounts................... 3,000

Cash................... 3,000

Accounts Receivable ....................................... 3,000

(d) Bad Debts Expense............................................... 20,000

Allowance for Doubtful Accounts .............. 20,000

Allowance for Doubtful Accounts

Beg. Bal. 9,000

Write-off 7,000 Recovery 3,000

Bad Debts 20,000

End Bal. 25,000

(e) Accounts Receivable Allowance for Doubtful AccountsBeg. Bal. 200,000 Collections 763,000 Beg. Bal. 9,000

Sales 800,000 Write-off 7,000 Write-off 7,000 Recovery 3,000

Recovery 3,000 Collections 3,000 Bad Debts 20,000

End Bal. 230,000 End Bal. 25,000

(f) Net realizable value of receivables is $205,000 ($230,000 – $25,000)

Problem – 8-1

(a) Total estimated bad debts

Number of Days OutstandingTotal 0–30 31–60 61–90 91–120 Over 120

Accountsreceivable $375,000 $222,000 $90,000 $38,000 $10,000 $15,000% uncollectible 1% 4% 5% 6% 10%Estimatedbad debts $9,820 $2,220 $3,600 $1,900 $600 $1,500

(b) Bad Debts Expense ................................. 13,820 Allowance for Doubtful Accounts

($9,820 +$4,000)..................... 13,820

(c) Allowance for Doubtful Accounts ................. 5,000

Accounts Receivable............................... 5,000

(d) Accounts Receivable.............................. 5,000

Allowance for Doubtful Accounts .......... 5,000

Cash............................. 5,000

Accounts Receivable............................... 5,000