Fundamentals Of Financial Accounting
6th Edition
ISBN: 9781259864230
Author: PHILLIPS, Fred, Libby, Robert, Patricia A.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 8, Problem 1COP
Recording and Reporting Credit Sales and
Okay Optical. Inc. (OOI), began operations in January, selling inexpensive sunglasses to large retailers like Walgreens and other smaller stores. Assume the following transactions occurred during its first six months of operations.
| January | 1 | Sold merchandise to Walgreens for $20,000; the cost of these goods to OOI was $12,000. |
| February | 12 | Received payment in full from Walgreens. |
| March | 1 | Sold merchandise to Bravis Pharmaco on account for $3,000; the cost of these goods to OOI was $1,400. |
| April | 1 | Sold merchandise to Tony’s Pharmacy on account for $8,000. The cost to OOI was $4,400. |
| May | 1 | Sold merchandise to Anjuli Stores on account for $2,000; the cost to OOI was $1,200. |
| June | 17 | Received $6,500 on account from Tony’s Pharmacy. |
Required:
- 1. Complete the following aged listing of customer accounts at June 30.
- 2. Estimate the Allowance for Doubtful Accounts required at June 30 assuming the following uncollectible rates: one month, 1 percent; two months, 5 percent; three months, 20 percent: more than three months, 40 percent.
- 3. Show how OOI would report its accounts receivable on its June 30
balance sheet . What amounts would be reported on an income statement prepared for the six-month period ended June 30? - 4. Bonus Question: In July, OOI collected the balance due from Bravis Pharmaco but discovered that the balance due from Tony’s Pharmacy needed to be written off. Using this information, determine how accurate OOI was in estimating the Allowance for Doubtful Accounts needed for each of these two customers and in total.
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Llang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales
on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.
Year 1
a. Sold $1,354,500 of merchandise on credit (that had cost $983,300), terms n/30.
b. Wrote off $20,200 of uncollectible accounts receivable.
c. Received $670,000 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 1.50% of accounts receivable would be uncollectible.
Year 2
e. Sold $1,561,900 of merchandise (that had cost $1,258,400) on credit, terms n/30.
f. Wrote off $33,800 of uncollectible accounts receivable.
g. Received $1,195,000 cash in payment of accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 1.50 % of accounts receivable would be uncollectible.
Required:
Prepare journal entries to record Liang's Year 1 and Year 2 summarized…
Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales
on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.
Year 1
a. Sold $1,353,500 of merchandise on credit (that had cost $979,500), terms n/30.
b. Wrote off $18,100 of uncollectible accounts receivable.
c. Received $671,300 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 3.00% of accounts receivable would be uncollectible.
Year 2
e. Sold $1,556,800 of merchandise (that had cost $1,295,500) on credit, terms n/30.
f. Wrote off $26,000 of uncollectible accounts receivable.
g. Received $1,394,400 cash in payment of accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 3.00% of accounts receivable would be uncollectible.
Required:
Prepare journal entries to record Liang's Year 1 and Year 2 summarized…
Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales
on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.
Year 1
a. Sold $1,346,600 of merchandise on credit (that had cost $979,500), terms n/30.
b. Wrote off $18,800 of uncollectible accounts receivable.
c. Received $669,400 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 3.00% of accounts receivable would be uncollectible.
Year 2
e. Sold $1,579,500 of merchandise (that had cost $1,326,000) on credit, terms n/30.
f. Wrote off $31,400 of uncollectible accounts receivable.
g. Received $1,251,500 cash in payment of accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 3.00% of accounts receivable would be uncollectible.
Required:
Prepare journal entries to record Liang's Year 1 and Year 2 summarized…
Chapter 8 Solutions
Fundamentals Of Financial Accounting
Ch. 8 - What are the advantages and disadvantages of...Ch. 8 - Prob. 2QCh. 8 - Which basic accounting principles does the...Ch. 8 - Using the allowance method, is Bad Debt Expense...Ch. 8 - What is the effect of the write-off of...Ch. 8 - How does the use of calculated estimates differ...Ch. 8 - A local phone company had a customer who rang up...Ch. 8 - What is the primary difference between accounts...Ch. 8 - What are the three components of the interest...Ch. 8 - As of May 1, 2016, Krispy Kreme Doughnuts had...
Ch. 8 - Does an increase in the receivables turnover ratio...Ch. 8 - What two approaches can managers take to speed up...Ch. 8 - When customers experience economic difficulties,...Ch. 8 - (Supplement 8A) Describe how (and when) the direct...Ch. 8 - (Supplement 8A) Refer to question 7. What amounts...Ch. 8 - 1. When a company using the allowance method...Ch. 8 - 2. When using the allowance method, as Bad Debt...Ch. 8 - 3. For many years, Carefree Company has estimated...Ch. 8 - 4. Which of the following best describes the...Ch. 8 - 5. If the Allowance for Doubtful Accounts opened...Ch. 8 - 6. When an account receivable is recovered a....Ch. 8 - Prob. 7MCCh. 8 - 8. If the receivables turnover ratio decreased...Ch. 8 - Prob. 9MCCh. 8 - Prob. 10MCCh. 8 - Prob. 1MECh. 8 - Evaluating the Decision to Extend Credit Last...Ch. 8 - Reporting Accounts Receivable and Recording...Ch. 8 - Recording Recoveries Using the Allowance Method...Ch. 8 - Recording Write-Offs and Bad Debt Expense Using...Ch. 8 - Determining Financial Statement Effects of...Ch. 8 - Estimating Bad Debts Using the Percentage of...Ch. 8 - Estimating Bad Debts Using the Aging Method Assume...Ch. 8 - Recording Bad Debt Estimates Using the Two...Ch. 8 - Prob. 10MECh. 8 - Prob. 11MECh. 8 - Recording Note Receivable Transactions RecRoom...Ch. 8 - Prob. 13MECh. 8 - Determining the Effects of Credit Policy Changes...Ch. 8 - Prob. 15MECh. 8 - (Supplement 8A) Recording Write-Offs and Reporting...Ch. 8 - Recording Bad Debt Expense Estimates and...Ch. 8 - Determining Financial Statement Effects of Bad...Ch. 8 - Prob. 3ECh. 8 - Recording Write-Offs and Recoveries Prior to...Ch. 8 - Prob. 5ECh. 8 - Computing Bad Debt Expense Using Aging of Accounts...Ch. 8 - Computing Bad Debt Expense Using Aging of Accounts...Ch. 8 - Recording and Reporting Allowance for Doubtful...Ch. 8 - Recording and Determining the Effects of Write-Off...Ch. 8 - Recording Note Receivable Transactions, Including...Ch. 8 - Recording Note Receivable Transactions, Including...Ch. 8 - Recording Note Receivable Transactions, Including...Ch. 8 - Using Financial Statement Disclosures to Infer...Ch. 8 - Using Financial Statement Disclosures to Infer Bad...Ch. 8 - Prob. 15ECh. 8 - Analyzing and Interpreting Receivables Turnover...Ch. 8 - (Supplement 8A) Recording Write-Offs and Reporting...Ch. 8 - Recording Accounts Receivable Transactions Using...Ch. 8 - Interpreting Disclosure of Allowance for Doubtful...Ch. 8 - Recording Notes Receivable Transactions Jung ...Ch. 8 - Accounting for Accounts and Notes Receivable...Ch. 8 - Analyzing Allowance for Doubtful Accounts,...Ch. 8 - Recording Accounts Receivable Transactions Using...Ch. 8 - Interpreting Disclosure of Allowance for Doubtful...Ch. 8 - Recording Notes Receivable Transactions CS...Ch. 8 - Accounting for Accounts and Notes Receivable...Ch. 8 - Analyzing Allowance for Doubtful Accounts,...Ch. 8 - Recording Accounts Receivable Transactions Using...Ch. 8 - Prob. 2PBCh. 8 - Prob. 3PBCh. 8 - Accounting for Accounts and Notes Receivable...Ch. 8 - Analyzing Allowance for Doubtful Accounts,...Ch. 8 - Recording and Reporting Credit Sales and Bad Debts...Ch. 8 - Prob. 2COPCh. 8 - Recording Daily and Adjusting Entries Using FIFO...Ch. 8 - Prob. 1SDCCh. 8 - Prob. 2SDCCh. 8 - Ethical Decision Making: A Real-Life Example You...Ch. 8 - Critical Thinking: Analyzing the Impact of Credit...Ch. 8 - Using an Aging Schedule to Estimate Bad Debts and...Ch. 8 - Accounting for Receivables and Uncollectible...
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- Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows. Year 1 a. Sold $1,349,500 of merchandise on credit (that had cost $976,000), terms n/30. b. Wrote off $18,900 of uncollectible accounts receivable. c. Received $669,100 cash in payment of accounts receivable. d. In adjusting the accounts on December 31, the company estimated that 1.10% of accounts receivable would be uncollectible. Year 2 e. Sold $1,580,200 of merchandise (that had cost $1,267,600) on credit, terms n/30. f. Wrote off $27,900 of uncollectible accounts receivable. g. Received $1,386,100 cash in payment of accounts receivable. h. In adjusting the accounts on December 31, the company estimated that 1.10% of accounts receivable would be uncollectible. Required: Prepare journal entries to record Liang's Year 1 and Year 2 summarized…arrow_forwardLiang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.Year 1 Sold $1,352,400 of merchandise on credit (that had cost $979,500), terms n/30. Wrote off $18,400 of uncollectible accounts receivable. Received $668,400 cash in payment of accounts receivable. In adjusting the accounts on December 31, the company estimated that 2.40% of accounts receivable would be uncollectible. Year 2 Sold $1,516,800 of merchandise (that had cost $1,299,500) on credit, terms n/30. Wrote off $34,500 of uncollectible accounts receivable. Received $1,187,600 cash in payment of accounts receivable. In adjusting the accounts on December 31, the company estimated that 2.40% of accounts receivable would be uncollectible Required:Prepare journal entries to record Liang’s Year 1 and Year 2 summarized transactions and its year-end…arrow_forwardLiang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows. Check my work mode: This shows what is correct or incorrect for the work you have completed so Year 1 a. Sold $1,353,900 of merchandise on credit (that had cost $978,100), terms n/30. b. Wrote off $20,900 of uncollectible accounts receivable. c. Received $670,600 cash-in payment of accounts receivable. d. In adjusting the accounts on December 31, the company estimated that 2.00% of accounts receivable would be uncollectible. Year 2 e. Sold $1,532,900 of merchandise (that had cost $1,268,900) on credit, terms n/30. f. Wrote off $31,100 of uncollectible accounts receivable. g. Received $1,245,100 cash in payment of accounts receivable. h. In adjusting the accounts on December 31, the company estimated that 2.00% of accounts receivable would be…arrow_forward
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