EXERCISE 8-3 (a) Accounts Receivable 800,000 Sales Revenue 800,000 Cash 763,000 Accounts Receivable 763,000 (b) Allowance for Doubtful Accounts 7,300 Accounts Receivable 7,300 (c) Accounts Receivable 3,100 Allowance for Doubtful Accounts 3,100 Cash 3,100 Accounts Receivable 3,100
EXERCISE 8-3 (Continued) (d) Bad Debts Expense 20,200 Allowance for Doubtful Accounts 20,200

Allowance for Doubtful Accounts Beg. Bal. 9,000 Write-off 7,300 Recovery 3,100 Bad Debts 20,200 End Bal. 25,000

(e) Accounts Receivable Allowance for Doubtful Accounts Beg. Bal. 200,000 Collections 763,000 Beg. Bal. 9,000 Sales 800,000 Write-off 7,300 Write-off 7,300 Recovery 3,100 Recovery 3,100 Collections 3,100 Bad Debts 20,200 End Bal. 229,700 End Bal. 25,000

(f) Net realizable value of receivables is $204,700 ($229,700 – $25,000)

EXERCISE 8-5 (a) Accounts Receivable Amount % Estimated Uncollectible Current $65,000 2 $1,300 1–30 days past due 12,900 5 645 31–90 days past due 10,100 30 3,030 Over 90 days past due 7,400 50 3,700 $8,675 (b) Mar. 31 Bad Debts Expense 6,575 Allowance for Doubtful Accounts ($8,675 – $2,100) 6,575 (c) The total balance of receivables increased from 2011 to 2012. However, of concern is the fact that each of the three categories of older accounts increased substantially during 2012. That is, customers are taking longer to pay and bad debts are likely to increase. Management needs to investigate the causes of this change. EXERCISE