The financial statements for X. Benedict Farms show the following
balances as of December 31:
• Credit Sales: $6,980,000
• Sales Returns and Allowance: $92,000
• Sales Discounts: $274,000
• Accounts Receivable: $1,828,000
• Allowance for Doubtful Accounts: $46,000 (Credit)
• Notes Receivable: $210,000
QUESTIONS:
1. An aging of accounts receivable indicates that $175,000 is expected
to become uncollectible as of December 31. If the percentage of
receivables method is used, what is the balance is Allowance for
Doubtful Accounts after any adjustment is made? (1 point)
2. Ignoring your answer to Question #1, based on its past history, X.
Benedict Farms expects 3.1% of its net credit sales will become
uncollectible as of December 31. If the percentage of net credit sales
method is used, what adjusting entry, if any, should X. Benedict Farms
make? (2 points)
3. The notes receivable consists of a single 10-month note, bearing
interest at 6.2%. This note was given to X. Benedict Farms, by its
customer on September 1. What adjusting entry, if any, should X.
Benedict Farms make on December 31? (2 points)