Question : 64) The Flying Pigs rugby team went bankrupt and owed : 1253211

64) The Flying Pigs rugby team went bankrupt and owed Team Shirts $364. Using the accounting equation format, prepare the entry to record the write-off. Include the account titles and amounts.

Shareholders’ equity

Assets

Liab.

CC

Retained earnings

65) Team Instructions: Divide the class into teams of three or four people. Each team member should work the following problem separately outside of class. Then give the students time in class to compare answers with their teammates and put together a final correct copy of the problem. Each team should turn in only one copy of the problem for grading, along with the annual report used. All team members will receive the same grade.

Provide students with copies of real merchandising companies’ annual reports, or give students the Web addresses of real merchandising companies and ask them to print out the annual reports. All team members should work with the same company’s annual report.

Answer the following questions using the annual report assigned to your team:

Part A: Complete the following chart:

Current year

Prior Year

Accounts receivable (gross)

$

$

Allowance for uncollectible accounts

$

$

Accounts receivable (net)

$         

$        

Allowance as a percentage of gross accounts receivable

%

%

Part B: Is the company’s estimate of uncollectible accounts increasing or decreasing?

Part C: Why might a company’s estimate of uncollectible accounts change?

66) Since C.D. Lee’s bonus is tied to net income, he decided to underestimate the bad debts expense for the year ended December 31, 2012. Which 2012 financial statements will be impacted by this underestimate of bad debts expense? Since bad debts expense is just an estimate, is this treatment ethical?

67) Match each of the statements below with the appropriate item. Each item is used only once.

a. Accounts receivable

b. Bad debts expense

c. Write-off

d. Allowance for uncollectible accounts

_____ 1. The contra account for accounts receivable has a balance of $(575).

_____ 2. The total amount that customers owe Seven Seas that is estimated to be uncollectible is               $657.

_____ 3. The total amount customers owe on account is $3,124.

_____ 4. Clara Frye declared bankruptcy while owing Seven Seas $500. The accountant for Seven               Seas has determined that this amount is now uncollectible. He closes the Frye account.

_____ 5. The accountant for Seven Seas determined that 2% of the May sales of $17,000 would be uncollectible. This amount was recorded as of May 31.

68) Match each of the statements below with the appropriate item. Each item is used only once.

a. Accounts receivable

b. Bad debts expense

c. Write-off

d. Allowance for uncollectible accounts

_____ 1. Three percent of the $2,000 credit sales for November are estimated to be uncollectible. That amount is recorded in the books as of November 30.

_____ 2. Joy Dow declared bankruptcy. Her account is no longer collectible. The accountant for Team Shirts closes the Dow account.

_____ 3. The contra account for accounts receivable has a balance of $(475).

_____ 4. Team Shirts is owed for T-shirts sold on account.