Problem Set $84$

Problem E$4$: Accounting for Bad Debts $(30$ points$)$

Page $12$ of $14$

Presented below are three independent fact situations related to the accounting and reporting of accounta recelvable and bad debts.

In this problem, you must present supporting calculations when applicable to recelve full and partial credit. Correct answers glven WITHOUT proper support will recelve a minimum of a twopepint deduction.

Part #$1$: Honey Boo Boo Redneck Enterprises Inc. $(12$ points$)$

Honey Boo Boo Enterprises inc. uses the allowance method to record bad debes expense and estimates that $2\mathrm{.}2\%$ of accounts recelvable will be uncollectible. The following information was gathered from the accounting records at December $31,2024$ PRIOR to the recording of the year$-$end adjustment for bad debts:

Sales on credit

Sales returns

Actounts recelvable

Allowance for doubtful accounts

Dr$.$

$$180,000$

$$1,282,000$

$$16,780$

$Cr.$

$$8,600,00$

a$.$ Prepare the adjusting entry required to recond the provision for bad debts. $(6$ points$)$

$\backslash$table$[[$DATE$,$ACCOUNT MAMES,DEEIT,CREDIT$],[,,,],[,,,],[,,,]]$

Supporting Computation Required:

b$.$ Post the adjusting entry to the relevant T$-$accounts below and compute the resulting balances in the accounts. $t2$ aeints$)$Problem Set $=4$

Page $13$ of $16$

Your Answer

Identify the amount of bad debts expense that Honey Boo Boo c$.$ Enterprises Inc. reported in its income statement for the yebr ended December $31,2024$: $(2$ points$)$

Your Answer

$$

d$.$ Provide the proper presentation of accounts recelvable in the GAAP balanct sheet of Honey Boo Boo Enterprises Inc., at December $31,2024$ including the appropriate description and the amount reported: $(2$ psints$)$

Dalance Sheet at December $31,2024$ :

Amount

Current Assets;

Accounts Receivable, net of Allowance of

Supporting Computation Required:Problem Set $-4$

Page $14=1$

Part a$2$: Klam Rumway Projects Company $(12$ points$)$

Klum Rutway Projects Company unes the allowance method to record bad debts expense and estimatrs that $1\mathrm{.}25\%$ of net sales will be uncollectible. The following information was gathered from the accounting records at December $31,2024$ PRIOR to the recording of the year$-$end adjustment for bad debts:

Sales on credit

Sales returns

Accounts recelvable

Allowance for doubtha accounts

$Dr.Cr.$

$$25,645,000$

$$5,457,680$

$$21,650$

a$.$ Prepare the adjusting entry required to record the provision for bad debts. $($$ peinss$)$

$\backslash$table$[[$DATE$,$ACCOUNT NAMES,DEBIT,CREDIT$],[,,,],[,,,],[,,,]]$

Supporting Computation Required:

b$.$ Pont the adjusting entry to the relevant T$-$accounts below and compute the resulting balances in

A the accounts. $($a peinta$)$

Your Answer

Identify the amount of bad debts expense that Klum Runway Projects Company reported in its income statement for the year ended December $31.2024$ : $(2$ peiets$)$Set $=4$

Page $15$ of $16$

$2.$ Povide the proper presentation of accounts receivable in the GAPP balanoe sheet of xlum Runway Projects Company at December $31,2024$ including the appropriate description and the amount reported: $(2$ points$)$

Batance Sheet at December $31,2024$ :

Amount

Current Assets:

Accounts Receivable, net of Allowance

Supporting Computation Required:

Part a$3$: Kelvin Thermal Products $(6$ polints$)$

$2.$ De December $31,2024,$ the accountant for Kelvin Thermal Products determined that accounts receivable contained customer accounts with total balances of $$35,900$ that were uncollectible.

Frepare the general journal entry to properly write$-$off the account as a bad debt under the allowance method. $(2$ peints$)$

$\backslash$table$[[$DATE$,$ACCOUNT NAMES,DEBIT,CREDIT$],[,,,],[,,,],[,,,]]$

b$.$ Post the write$-$eff entry to the relevant T$-$accounts below and compute the resulting balances in