Posted: July 26th, 2016

. What amount will be reported on the 2012 balance sheet for accounts receivable?

The company also reported bad debt expense of $5 million in 2008, $11 million in 2007, and $7 million in 2006.

1. Record the company’s write-offs of uncollectible accounts for 2008.

2. Assuming all sales were on credit, what amount of cash did Dr. Pepper Snapple Group collect from customers in 2008?

3. Compute the company’s net profit margin for the three years presented. What does the trend suggest to you about Dr. Pepper Snapple Group?

Case B. Samuda Enterprises uses the aging approach to estimate bad debt expense. At the end of 2011, Samuda reported a balance in accounts receivable of $620,000 and estimated that $12,400 of its accounts receivable would likely be uncollectable. The allowance for doubtful accounts has a $1,500 debit balance at year-end (that is, more was written off during the year than the balance in the account).

1. What amount of bad debt expense should be recorded for 2011?
2. What amount will be reported on the 2011 balance sheet for accounts receivable?

Case C. At the end of 2012, the unadjusted trial balance of Territo, Inc. indicated $5,840,000 in Accounts Receivable, a credit balance of $9,200 in Allowance for Doubtful Accounts, and Sales Revenue (all on credit) of $160,450,000. Based on knowledge that the current economy is in distress, Territo increased in bad debt rate estimate to 0.3 percent on credit sales.

1. What amount of bad debt expense should be recorded for 2012?
2. What amount will be reported on the 2012 balance sheet for accounts receivable?

Case D. Steward Company reports the following inventory records for November 2010:

Inventory
Date Activity #of Units Cost/Unit
November 1 Beginning balance 100 $18
November 4 Purchase 300 $19
November 7 Sale (@ $50 per unit) 200
November 13 Purchase 500 $21
November 22 Sale (@ $50 per unit) 500