PRACTICE PROBLEMS

$1)$ On February $28,2023.$ Big White Ski Equipment had a $$25,500$ debit balance in Accounts Receivable. During March, the company had sales of $$65,500,$ which included $$60,000$ in credit sales. March collections were $$53,000.$

$$ February $28$ credit balance in Allowance for Doubtful Accounts is $$1,300$

$$ Bad Debt Expense is estimated as $3\%$ of credit sales

a$.$ Prepare journal entries to record sales and collections during March, and bad debt expense by the allowance method using the percent$-$of$-$sales. Use March $31,2023$ as your journal entry date. $(5$ marks$)$

b$.$ Prepare T$-$accounts to show the ending balances in Accounts Receivable and Allowance for Doubtful Accounts. Compute net Accounts Receivable at March $31.(5$ marks$)$

$2)$ Lui Dental began operations in January $2023$ selling dental appliances to dentists. The following transactions occurred during the first six months of operations:

Jan $15$ Sold appliances to Dr$.$ Hall on account for $$15,750$; cost $$6,400.$

Feb $22$ Received payment in full from Dr$.$ Hall.

Mar $4$ Sold merchandise to Dr$.$ Evans on account for $$4,400$; cost $$1,250.$

Apr $20$ Sold merchandise to Dr$.$ Murray on account for $$6,700$; cost $$2,990.$

May $31$ Sold merchandise to Dr$.$ Kim on account for $$3,200$; cost $$1,100.$

Jun $28$ Received $$3,000$ on account from Dr$.$ Evans.

a$.$ Complete the following aged listing of customer accounts as of June $30,2023$: $(8$ marks$)$

Age of Accounts Receivable

Customer $1-3031-6061-90$ Over $90$ Total

Dr$.$ Evans

Dr$.$ Hall

Dr$.$ Kim $3,2003,200$

Dr$.$ Murray

Totals

b$.$ Estimate the Allowance for Doubtful Accounts required at June $30,2023,$ assuming the following uncollectible rates: $30$ days, $2\%$; $60$ days, $5\%$; $90$ days, $15\%$; $>90$ days, $50\%.(1$ mark$)$

$3)$ Acme Cell Phones had a debit balance in Accounts Receivable of $$100,000$ on January $1$st$,2023.$ On that date, Acme sold $$80,000$ of merchandise to Brodie Trucking Company on account. Ignore the cost of goods sold. On January $28,$ Brodie paid only $$56,000$ on the accounts receivable. After repeated attempts to collect, Acme finally wrote off its accounts receivable from Brodie on May $31.$ On December $1,$ Acme received Brodie$$s cheque for $$24,000$ with a note apologizing for the late payment.

a$.$ Record the May $31$ and December $1$ journal entries as if Acme Cell Phones were using the direct write$-$off method. $(3$ marks$)$