Mobile Technology Ltd. reported an unadjusted balance of accounts receivable of $1,380,000 at 31 December 20X3, along with a credit balance in the allowance for doubtful accounts of $85,000 and an allowance for sales discounts of $7,900. At year-end, the company determined that an allowance of $21,000 for sales discounts was needed. It also decided that $57,200 of accounts receivable were uncollectible and should be written off. Of the remaining receivables, it was determined that 30% were current, and of the remaining net current balance, an allowance for doubtful accounts of 4% of the net balance was needed. The remaining 70% of outstanding accounts receivable were past due and an allowance for doubtful accounts of 10% of the outstanding balance was needed. For each of the above show how net accounts receivable would be reported on the statement of financial position and calculate bad debt expense for the year.

Mobile Technology Ltd. reported an unadjusted balance of accounts receivable of $1,380,000 at 31 December 20X3, along with a credit balance in the allowance for doubtful accounts of $85,000 and an allowance for sales discounts of $7,900. At year-end, the company determined that an allowance of $21,000 for sales discounts was needed. It also decided that $57,200 of accounts receivable were uncollectible and should be written off. Of the remaining receivables, it was determined that 30% were current, and of the remaining net current balance, an allowance for doubtful accounts of 4% of the net balance was needed. The remaining 70% of outstanding accounts receivable were past due and an allowance for doubtful accounts of 10% of the outstanding balance was needed. For each of the above show how net accounts receivable would be reported on the statement of financial position and calculate bad debt expense for the year.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter5: Sales And Receivables

Section: Chapter Questions

Problem 85APSA: Determining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto...

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At the end of 20-3, Martel Co. had 410,000 in Accounts Receivable and a credit balance of 300 in Allowance for Doubtful Accounts. Martel has now been in business for three years and wants to base its estimate of uncollectible accounts on its own experience. Assume that Martel Co.s adjusting entry for uncollectible accounts on December 31, 20-2, was a debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts of 25,000. (a) Estimate Martels uncollectible accounts percentage based on its actual bad debt experience during the past two years. (b) Prepare the adjusting entry on December 31, 20-3, for Martel Co.s uncollectible accounts.
Bristax Corporation recorded $1,385,660 in credit sales for the year, and $732,410 in accounts receivable. The uncollectible percentage is 3.1% for the income statement method and 4.5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $20,550; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $17,430; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Jars Plus recorded $861,430 in credit sales for the year and $488,000 in accounts receivable. The uncollectible percentage is 2.3% for the income statement method, and 3.6% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $10,220, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $5,470, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Ink Records recorded $2,333,898 in credit sales for the year and $1,466,990 in accounts receivable. The uncollectible percentage is 3% for the income statement method and 5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $20,254; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Tonis Tech Shop has total credit sales for the year of 170,000 and estimates that 3% of its credit sales will be uncollectible. Allowance for Doubtful Accounts has a credit balance of 275. Prepare the adjusting entry at year-end for the estimated bad debt expense. (a) Based on an aging of its accounts receivable, Kyles Cyclery estimates that 3,200 of its year-end accounts receivable will be uncollectible. Allowance for Doubtful Accounts has a debit balance of 280 at year-end. Prepare the adjusting entry at year-end for the estimated uncollectible accounts.
Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: a. Journalize the write-offs under the direct write-off method. b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded 5,250,000 of credit sales during the year. Based on past history and industry averages, % of credit sales are expected to be uncollectible. c. How much higher (lower) would Casebolt Companys net income have been under the direct write-off method than under the allowance method?
Determining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto Parts had an accounts receivable balance of $31,800 and a balance in the allowance for doubtful accounts of $2,980 (credit). During the year, Tennyson had credit sales of $624,300, collected accounts receivable in the amount of $602,700, wrote off $18,600 of accounts receivable, and had the following data for accounts receivable at the end of the period: Required: 1. Determine the desired post adjustment balance in allowance for doubtful accounts. 2. Determine the balance in allowance for doubtful accounts before the bad debt expense adjusting entry is posted. 3. Compute bad debt expense. 4. Prepare the adjusting entry to record bad debt expense.
Funnel Direct recorded $1,345,780 in credit sales for the year and $695,455 in accounts receivable. The uncollectible percentage is 4.4% for the income statement method and 4% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $13,888; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Information related to accounts receivable is given: Mobile Technology Ltd. reported an unadjusted balance of accounts receivable of $1,285,000 at 31 December 20X3, along with a credit balance in the allowance for doubtful accounts of $83,100 and an allowance for sales discounts of $6,000. At year-end, the company determined that an allowance of $12,500 for sales discounts was needed. It also decided that $53,400 of accounts receivable were uncollectible and should be written off. Of the remaining receivables, it was determined that 40% were current, and of the remaining net current balance, an allowance for doubtful accounts of 3% of the net balance was needed. The remaining 60% of outstanding accounts receivable were past due and an allowance for doubtful accounts of 10% of the outstanding balance was needed. Required: For each case above, show how net accounts receivable would be reported on the statement of financial position, and calculate bad debt expense for the year. (Round…