P7.2 (Bad-Debt Reporting) The following are a series of unrelated situations.
1. Halen Company's unadjusted trial balance at December 31, 2019, included
the following accounts.
Debit Credit
Accounts receivable $53,000
Allowance for doubtful accounts 4,000
Net sales $1,200,000
Halen Company estimates its bad debt expense to be 7% of gross accounts
receivable. Determine its bad debt expense for 2019.
2. An analysis and aging of Stuart Corp. accounts receivable at December 31, 2019,
disclosed the following.
Amounts estimated to be uncollectible $ 180,000
Accounts receivable 1,750,000
Allowance for doubtful accounts (per books) 125,000
What is the cash realizable value of Stuart's receivables at December 31, 2019?
3. Shore Co. provides for doubtful accounts based on 4% of gross accounts
receivable, which had a balance of $1,500,000 at year-end. The following data are
available for 2019.
Credit sales during 2019 $4,400,000
Allowance for doubtful accounts 1/1/19 17,000
Collection of accounts written off in prior years
(customer credit was reestablished) 8,000
Customer accounts written off as uncollectible during 2019 30,000
What is the balance in Allowance for Doubtful Accounts at December 31, 2019?
4. At the end of its first year of operations, December 31, 2019, Darden Inc.
reported the following information.
Accounts receivable, net of allowance for doubtful accounts $950,000
Customer accounts written off as uncollectible during 2019 24,000
Bad debt expense for 2019 84,000
What should be the balance in accounts receivable at December 31, 2019, before
subtracting the allowance for doubtful accounts?
5. The following accounts were taken from Bullock Inc.'s trial balance at December
31, 2019.
Debit Credit
Net credit sales $750,000
Allowance for doubtful accounts $ 14,000
Accounts receivable 310,000
If doubtful accounts are 3% of accounts receivable, determine the bad debt
expense to be reported for 2019.