Accounting for Receivable

Problem 1
The following selected transactions relate to The Blue Flag Company.
Mar 1 Sold $35,000 of merchandise to The Gunners Company, terms 2/10, n/30.
11 Received payment in full from The Gunners Company for balance due.
12 Accepted Spurs Company $40,000, 6-month, 12 % note for balance due.
13 Made The Blue Flag Company credit card sales for $16,200.
15 Made American Express credit sales totaling $7,600. A 5% service fee is charged by American
Express.
30 Received payment in full from American Express Company.
Apr 11 Sold accounts receivable of $9,000 to Walcott Factor. Walcot Factor assesses a service charge
of 2% of the amount of receivable sold.
13 Received collections of $7,200 on The Blue Flag Company credit card sales and added finance
charge of 1.5% to the remaining balances.
May 10 Write off as uncollectible $18,000 of accounts receivable. The Blue Flag Company uses the
percentage of sales basis to estimate bad debts.
June 30 Credit sales for the first 6 months total $2,700,000. The bad debt percentage is 1% of credit
sales. At June 30, the balance in the allowance account is $3,500.
July 16 One of the accounts receivable written off in May was from J. Cole, who pays the amount
due, $7,000, in full.
Instructions
Prepare the journal for the transactions.

Problem 2
At December 31, 2009, Sycamore Imports reported the following information on its balance sheet.
Account receivable $1,020,000
Less: Allowance for doubtful accounts 60,000
During 2010, the company had the following transactions related to receivables.
1. Sales on account $ 2,670,000
2. Sales return and allowances 40,000
3. Collections of accounts receivable 2,300,000
4. Write-offs of accounts receivable deemed uncollectible 65,000
5. Recovery of bad debt previously written off as uncollectible 20,000
Instructions
a. Prepare the journal entries to record each of these five transaction. Assume that no cash discounts
were taken on the collections of accounts receivable.
b. Enter the January 1, 2010, balances in Account Receivable and Allowance for Doubtful Accounts. Post
the entries to the two accounts (use T account), and determine the balances.
c. Prepare the journal entry to record bad debt expense for 2010, assuming that an aging of accounts
receivable indicates that estimated bad debts are $95,000.
d. Compute the accounts receivable turnover ratio for the year 2010.