11 The general ledger of Arugula Corporation at December 31

11. The general ledger of Arugula Corporation at December 31, 2015 shows the following balances, all of which are normal: Cash $ 28,000 175,000 11,000 165,000 Merchandise inventory Prepaid expenses Accounts receivable The balance of Allowance for Doubtful Accounts at January 1.2015 is $12.000 Management estimates the net realizable value of accounts receivable should be $143,000 The adjusting entry for bad debts for 2015 is (a) Bad Debts Expense 10,000 10,000 (b) Bad Debts Expense 22,000 Bad Debts Expense 14,300 14.300 (c) (d) Bad Debts Expense 11,000 11,000 (e) None of the above 12. Under the aging of a company\'s accounts receivable, the uncollectible accounts are estimated to be $12,000. The unadjusted balance for the Allowance for Doubtful Accounts is $2,000 credit. What is the amount of bad debts expense for the year? (a) $14.000 (b) $12,000 (c) $2,000 (d) $10,000 (e) None of the above 13. The net realizable value of the Accounts Receivable is $21,000 before the write off of a $1,500 account. What is the net realizable value after the write off? (a) $22.500 (b) $21,000 (c) $19,500 (d) $18,000 (e) None of the above 4. JLIB Holdings Inc. had the following balances in its short term receivable accounts at October 31, 2016 (in CAD millions): Allowance for Doubtful Trade and Notes Receivable $66.0, Allowance for Doubtful Financing Receivables $177.0, Financing receivables $22,159.1: Other Receivables $1,790.9; and Trade Accounts and Notes Receivable $3,799.1 What should be presented as the balance for the net realizable value of Total receivables in the JLIB Statement of Financial Position? a) $27.749.1 b) $27,683.1 $27,506.1 $27,329.1 e) None of the above

Solution

Answer 1: The correct option is (d). Total debtors impairment is 23,000 (165,000-143,000). Current bad debt provision is 12,000. Therefore, entry is required for differential 11,000.

Answer 2:Correct option is (d). Uncollectible amounts estimate is 12,000. Existing allowance is 2,000. Therefore, further allowance of 10,000 is required.

Answer 3:Net realisable value after write off will be 19,500 (21,000-1,500). Therefore, correct option is (c)

Answer 4: Correct option is (c). Total receivables (22,159.1+3,799.1+1790.1=27,749.1) less (177+66=243). i.e. 27,749.1-243=27,506.1

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