Solution to Receivables MCQ Problems Part 2

Hello. Here are the solutions for MCQ Problems regarding Receivables: 1. Smithson Corporation had a 1/1/12 balance in the Allowance for Doubtful Accounts of $20,000. During 2012, it wrote off $14,400 of accounts and collected $4,200 on accounts previously written off. The balance in Accounts Receivable was $400,000 at 1/1 and $480,000 at 12/31. At 12/31/12, Smithson estimates that 5% of accounts receivable will prove to be uncollectible. What is Bad Debt Expense for 2012? 2. Black Corporation had a 1/1/12 balance in the Allowance for Doubtful Accounts of $18,000. During 2012, it wrote off $12,960 of accounts and collected $3,780 on accounts previously written off. The balance in Accounts Receivable was $360,000 at 1/1 and $432,000 at 12/31. At 12/31/12, Black estimates that 5% of accounts receivable will prove to be uncollectible. What should Black report as its Allowance for Doubtful Accounts at 12/31/12? 3. Shelton Company has the following account balances at year-end: Accounts receivable, $120,000 Allowance for doubtful accounts, 7,200 Sales discounts, 4,800 Shelton should report accounts receivable at a net amount of ______________