Question P9-29
You must use the associated Excel worksheet to complete all assigned exercises/problems. No other format will be accepted.
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P9-29A
P9-29A
Accounting for uncollectible accounts using the allowance method
(aging-of-receivables) and reporting receivables on the balance sheet
At September 30, 2018, the accounts of Green Terrace Medical Center (GTMC) include
the following:
Accounts Receivable
$145,000
Allowance for Bed Debt (credit balance)
3,500
During the last quarter of 2018, GTMC completed the following selected transactions:
* Sales on account, $450,000. Ignore Cost of Goods Sold
* Collections on account, $427,100
* Wrote off accounts receivable as uncollectible: Regan, Co. $1,400; Owen Reis, $800;
and Patterson, Inc., $700
* Recorded bad debts expense based on the aging of accounts receivable, as follows:
Age of Accounts
1-30 days
31-60 days
61-90 days
Over 90
days
Accounts Receivable
$104,000
$39,000
$14,000
$8,000
Estimated percent uncollectible
0.3%
3%
30%
35%
Requirements
1.
Open T-accounts for Accounts Receivable and Allowance for Bad Debts. Journalize the transactions (omit explanations) and post to the two accounts.
2.
Show how Green Terrace Medical Center should report net accounts receivable on its December 31, 2018, balance sheet.
Solution:
Requirements 1 and 2
Date
Accounts and Explanation
Debit
Credit
2018
Accounts Receivable
– 0
Sales Revenue
– 0
Cash
– 0
Accounts Receivable
– 0
Allowance fo Bad Debts
– 0
Accounts Receivable-Regan, Co.
– 0
Accounts Receivable-Owen Reiss
– 0
Accounts Receivable-Patterson, Inc.
– 0
Dec. 31
Bad Debts Expense
– 0
Allowance for Bad Debts
– 0
Age of Accounts Receivable
1 – 30 Days
31 – 60 Days
61 – 90 Days
Over 90 Days
Total Receivables
Accounts Receivable
– 0
– 0
– 0
– 0
– 0
Percent uncollectible
0%
0%
0%
0%
Estimated total uncollectible
– 0
– 0
– 0
– 0
– 0
Requirement 2
Accounts Receivable
Allowance for Bad Debts
9/30 Balance
– 0
– 0
Collections
Write-off
– 0
– 0
9/30 Balance
Net credit sales
– 0
– 0
Write-offs
– 0
Unadj. Bal.
– 0
Adj.
Dec. 31 Balance
– 0
– 0
Dec. 31 Balance
Requirement 2
GREEN TERRACE MEDICAL CENTER
Balance Sheet—Partial
December 31, 2018
Assets
Current Assets:
Accounts Receivable
$ – 0
Less: Allowance for Bad Debts
– 0
$ – 0
&”Arial,Bold”&12HORNGREN’S ACCOUNTING – 12th Edition
&”Arial,Bold”Chapter 9: Receivables &”Arial,Bold”Page &P of &N
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