1-60 days (6,000,000 x 10% ) 600,000

61-180 days (2,000,000 x20% ) 400,000

181-360 days (1,500,000 x 30%f) 450,000
More than oneyear (500,000 -100,000 x 50%) 200,000
Required allowance December 31, 2016 1,650,000
What amount should be reported as
doubtful accounts expense for the current year? 900,000

Allowance for doubtful accounts

1-Jan-16 1,000,000
Recoveries 50,000
Doubtful accounts expense (SQUEEZE) 900,000
Total 1,950,000
Accounts written off (200,000 + 100,000) 300 000
Allowance for doubtful accounts
31-Dec-16 1,650,000

Correct doubtful accounts expense 900,000

Recorded doubtful accounts expense
(3% x 20,000,000) 600,000
Increase in doubtful accounts expense 300,000
What is the year-end adjustment to the
allowance for doubtful accounts on December 31, 2016? 300,000 credit

Accounts receivable December 31, 2016

(10,000,000-100,000 to be written off) 9,900,000
Allowance for doubtful accounts
-December 31, 2016 -1,650,000
Net realizable value 8,250,000
What is the net realizable value of
accounts receivable on December 31, 201 6? 8,250,000

Accounts receivable January 1

Add: Credit sales
Total
Less:
Collection from customers 4,750,000
Accounts written off 125,000

Accounts receivable December 31 1,825,000

Answer 1,825,000
 Inventory -January 1
Purchases
Goods available for sale 12,800,000
Inventory -December 31 4,400,000
Cost of goods sold
Gross margin on sales
Gross sales
Cash sales
Credit sales
Accounts receivable January 1
Total
Accounts receivable collected
Accounts receivable December 31
What is the balance of accounts receivable on December 31? 6,200,000

Purchases
Inventory - December 31
Cost of goods sold
Markup on cost (40% x 5,600,000)
Sales (140% x 5,600,000)
Collections from customers
Accounts receivable - December 31
Answer 3,840,000

Collection probability Doubtful

300,000 95% 5%
1,500,000 80% 20%
1,200,000 75% 25%
1,200,000 50% 50%
100,000 0% 100%
7,000,000
Answer 1,450,000

Amount reported as doubtful expense for the current year

600,000
100,000
700,000
Answer 700,000

Net realizable value

7,000,000-1,450,000
Answer 5,550,000
1,300,000
5,400,000
6,700,000

4,875,000
 4,800,000
8,000,000

8,400,000
4,200,000
12,600,000
-2,000,000
10, 600,000
4,000,000
14,600,000
-8,400,000
6,200,000

7,000,000
-1,400,000
5,600,000
2,240,000
7,840,000
-4,000,000
3,840,000

150,000
300,000
300,000
600,000
100,000
1,450,000