University - Year 2

Accounting

1.
a.) ) Accounts receivable 7,000,000
Sales 7,000,000
2. 2,450,00
) Cash 0
Sales discount 50,000
Accounts receivable (2,450,000/98%) 2,500,000
3. 3,900,00
) Cash 0
Accounts receivable 3,900,000
4.
) Allowance for doubtful accounts 30,000
Accounts receivable 30,000
5.
) Accounts receivable 10,000
Allowance for doubtful accounts 10,000
Cash 10,000
Accounts receivable 10,000
6.
) Sales return 70,000
Accounts receivable 70,000

b.) Doubtful accounts 40,000

Allowance for doubtful accounts 40,000
Rate = 40,000/1,000,000 = 4%

Allowance for D/A - Dec 31 (4% x 1,500,000) 60,000

Less: Allowance before adjustment -20,000
Doubtful accounts expense 40,000

c.) Accounts receivable - Dec 31 1,500,000

Allowance for doubtful accounts -60,000
Net realizable value 1,440,000