ADDITIONAL PROBLEMS
CH. 5 – Sales & Accounts Receivables
1. At the end of 2020, Aggie Company has Accounts Receivable of $500,000 and an Allowance for
Doubtful Accounts of $25,000 (credit). On January 24, 2021, it is learned that the company’s
receivable from t.u. inc. is not collectible and therefore management authorizes a write-off of their
account for $10,000.
a. Prepare the journal entry to record the write-off of the uncollectible account.
b. What is the Net Realizable Value of the Accounts Receivables:
1. Before the write-off _____________________________
2. After the write-off _____________________________
2. Alex Co. elects to use the percentage of credit sales method in 2021 to record bad debts and
concludes that 2% of its credit sales will become uncollectible. Sales are $700,000 for 2021, of
which $200,000 are cash. The Allowance for Doubtful Accounts had a credit balance of $12,000 at
December 31, 2021 (before adjustment). What is the ending balance in the Allowance for Doubtful
Accounts after adjustment?
3. The ledger of the Patio Company at the end of the current year shows Accounts Receivable of
$80,000, Credit Sales $940,000 and Sales Returns $40,000.
a. If the Allowance for Doubtful Accounts has a credit balance of $800 before adjustment,
determine bad debt expense assuming the company uses:
1) 1% of net sales -
2) 10% of accounts receivables -
