Reference no: EM132826333

Questions -

Q1) At the beginning of current year, Onix Company reported the following information:

Accounts receivable 1,500,000

Allowance for doubtful accounts 60,000

The following summary transactions affecting accounts receivable occurred during the current year:

Sales - all on account 2/10, 1/15, n/60 7,935,000

Cash received from customers 8,000,000

The cash received from customers included the following.

Customers paying within the 10-day discount period 4,410,000

Customers paying within the 15-day discount period 2,475,000

Recovery of accounts written off 15,000

Customers paying beyond the discount period ?

Accounts receivable written off as worthless 55,000

Credit memoranda for sales return 30,000

Requirements -

1. Prepare journal entries to record the transactions.

2. Prepare the adjustment for doubtful accounts if the entity follows the percentage of accounts receivable consistently.

3. Determine the net realizable value of accounts receivable at year-end.

Q2) Cherry Company reported the following unadjusted balances at year-end:

Debit Credit

Accounts receivable 3,000,000

Allowance for doubtful accounts 10,000

Net credit sales 8,000,000

The entity estimated that 3% of the gross accounts receivable would become uncollectible.

1. What amount should be reported as doubtful accounts expense for the current year?

a. 240,000

b. 100,000

c. 90,000

d. 80,000