Question

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11. Caruthers Company uses the allowance method to account for bad debts. At the beginning of 2018, the Allowance for Uncollectible Accounts account had a credit balance of $13,800. Credit sales for 2018 totaled $790,000. During this year, $18,700 in receivables were written off as uncollectible. The year- end accounts receivable balance was $198,600. Caruthers anticipates that 2% of all credit sales will ultimately become uncollectible. The fiscal year ends on December 31. What is the balance in the Allowance for Uncollectible Accounts account at the end of 2018 18.700 5700 10.900 13. On January 1, 2018 Cox Appliances sold customer Peter Sperry a three-year extended warranty for 5330 with the purchase of his new appliances. Cox incurred $3.240 in warranty expenses this year its outstanding extended warranties for all customers. Mr. Sperry did not file a warranty claim in 2018, Prepare Cox's adjusting entry on December 31, 2018 related to Mr. Sperry's warranty. Date PR Debit Credit 110 Llability, ext. W sales revenue I 14. Listener Video discovered the batteries in one of its products represents a potential fire hazard. The product will definitely be recalled and is estimated to cost the company $167,000. Date Account PR Debit Credit 1167.000 Loss- eR Liability - PR 167,000

Answer 1

Solution for Problem 11:

Calculation of Allowance for Uncollectible account balance for the year end 2018:

Particulars	Amount
Allowance for Uncollectible account receivables balance at the beginning of 2018	13800
Less: Receivables Written off as Uncollectible during the year 2018	-18700
Add: Allowance for Uncollectible account receivables provided for the Current year (2% of Credit Sales)i.e 0.02* $790,000	15800
Allowance for Uncollectible account balance at the end of 2018	10900

Ledger A/c will be as follows for above:

Allowance for Uncollectible account receivables a/c ( Ledger)
Dr                                                                                                                                                                                                                                                  Cr
Date	Particulars	Amount	Date	Particulars	Amount
31st Dec 2018	To Write off of Uncollectibles	18700	1st January 2018	By Balance b/d (Opening Balance)	13800
			31st Dec 2018	By Profit /loss a/c ( Income Statement)	15800
31st Dec 2018	By Balance ( Carried forward to next year)	10900
		29600			29600