The ledger of Hixson Company at the end of the current year shows accounts receivable 120,000, sales 840,000 and sales returns and allowance 30,000

E8-3 The ledger of Hixson Company at the end of the current year shows accounts receivable 120,000, sales 840,000 and sales returns and allowance 30,000.

Instructions
a) If Hixson uses the direct write off method to account for uncollectible accounts, journalize the adjusting entry at December 31, assuming Hixson determines that fells 1.400 balance is uncollectible.
b) If allowance for doubtful accounts has a credit balance of 2,100 in the trial balance journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 1 % of net sales, and (2) 10 % of accounts receivable
c) If allowance for doubtful accounts has a debit balance of $200 in the trial balance, journalize the adjusting entry at December 31, assuming bad debts are expected to be (1) 0.75% of net sales and (2) 6% of accounts receivable.

Click here for the solution: The ledger of Hixson Company at the end of the current year shows accounts receivable 120,000, sales 840,000 and sales returns and allowance 30,000

At the end of 2010 Sorter Company has accounts receivable of $900,000 and an allowance for doubtful accounts of $40,000

E7-8 (Recording Bad Debts) At the end of 2010 Sorter Company has accounts receivable of $900,000 and an allowance for doubtful accounts of $40,000. On January 16, 2011, Sorter Company determined that its receivable from Ordonez Company of $8,000 will not be collected, and management authorized its write-off.

Instructions
(a) Prepare the journal entry for Sorter Company to write off the Ordonez receivable.
(b) What is the net realizable value of Sorter Company’s accounts receivable before the write-off of the Ordonez receivable?
(c) What is the net realizable value of Sorter Company’s accounts receivable after the write-off of the Ordonez receivable?

Click here for the solution: At the end of 2010 Sorter Company has accounts receivable of $900,000 and an allowance for doubtful accounts of $40,000