Concept explainers
Concept introduction:
Allowance for doubtful debts:
Companies generally make credit sales to improve their business and expand their customer base. When a credit sales is made the amount that the company has to receive from its customers is known as receivable. Usually all the customers does not repay the amount they owe to the company and hence there are chances of some not repaying the amount and these are called as
Calculate Columbia’s allowance for doubtful debts as a percentage of gross accounts receivable at the end of 2015 and 2016.
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Cornerstones of Financial Accounting
- Comparative Analysis: Under Armour, Inc., versus Columbia Sportswear Refer to the 10-K reports of Under Armour, Inc., and Columbia Sportswear that are available for download from the companion website at CengageBrain.com. Required: Look at Under Armours Note 2 (Summary of Significant Accounting Policies) under the heading Allowance for Doubtful Accounts. Based on this disclosure, what is the balance in the allowance for doubtful accounts for 2015 and 2016? If actual losses from uncollectible accounts differ enough from the estimates in the allowance for doubtful accounts, where would Under Armour record a benefit or charge?arrow_forwardAverage Uncollectible Account Losses and Bad Debt Expense The accountant for Porile Company prepared the following data for sales and losses from uncollectible accounts: Required: 1. Calculate the average percentage of losses from uncollectible accounts for 2015 through 2018. 2. Assume that the credit sales for 2019 are $1,260,000 and that the weighted average percentage calculated in Requirement 1 is used as an estimate of loses from uncollectible accounts for 2019 credit sales. Determine the bad debt expense for 2019 using the percentage of credit sales method. 3. CONCEPTUAL CONNECTION Do you believe this estimate of bad debt expense is reasonable? 4. CONCEPTUAL CONNECTION How would you estimate 2019 bad debt expense if losses from uncollectible accounts for 2018 were What other action would management consider?arrow_forwardBristax 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.arrow_forward
- 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.arrow_forwardse the following selected financial statement information from Black Water Industries. BLACK WATER INDUSTRIES Year Net Credit Sales Ending Accounts Receivable 2017 $687,430 $332,250 2018 705,290 362,450 2019 769,500 403,650 A. Compute the number of days’ sales in receivables ratios for 2018 and 2019. Round your answers to two decimal places. 2018 fill in the blank 1 days 2019 fill in the blank 2 days B. Using the sales in accounts receivable, choose the statement that most closely describes the company's management of its receivables. a. The company collects its accounts slowly, and the days are increasing. b. This may be leave the company unable to pay current debt owed to a lender. c. The company may need to be more aggressive with its receivable collection procedures. d. All of the above statements may be correct.arrow_forwardUse the following financial statement information from Black Water Industries. BLACK WATER INDUSTRIES Ending Accounts Receivable Year Net Credit Sales 2017 $690,430 $335,250 2018 705,290 364,450 2019 770,500 406,650 A. Compute the accounts receivable turnover ratios for 2018 and 2019. Round your answers to two decimal places. 2018 times 2019 times B. Using the accounts receivable turnover, choose the statement that most closely describes the company's management of its receivables. a. The company's lending policies may be too strict. b. Collection efforts are not aggressive enough. There may be uncollectable receivables affecting the beginning and ending C. balances. d. All of the above statements may be correct. a b darrow_forward
- Analysis of Accounts Receivable and Allowance for Doubtful Accounts Steelcase, Inc. reported the following amounts in its 2014 and 2013 10-K reports (years ended February 28, 2014 and February 22, 2013). 2014 2013 ($ millions) From the income statement: Net sales From the balance sheet: Accounts receivable, net Customer deposits From the disclosure on allowance for doubtful accounts: Balance at beginning of period Additions (reductions) charged to income Adjustments or deductions Balance at end of period To write-off uncollectible accounts. a. Prepare the journal entry to record accounts receivable written off as uncollectible in 2014. Also prepare the entry to record the provision for doubtful accounts (bad debts expense) for 2014. Enter answers in millions (as shown above). General Journal Description ◆ ◆ To record the provision for doubtful accounts. 0 ♦ times $0 $3,089 $2,954 Debit 331.8 302.3 23.0 20.5 million 0 0 17.5 22.6 5.8 6.1 (3.3) 20.0 0 0 Gross accounts receivable (in…arrow_forwardI need the answer on number 15 only. Thanks 1.The 2017 year-end balances of Accounts Receivable and Allowance for Doubtful Accounts are $1,000,000 and $100,000, respectively. Complete the net realizable value (net accounts receivable) presentation at 12/31/2017. Do not use decimals. 2.Prepare the journal entry to record 2018 total sales: $3,000,000, of which $2,200,000 are on account. Do not use decimals. [Note: enter cash sales in the first line.] 3.Compute the net realizable value (net accounts receivable) presentation after the journal entry to record 2018 sales. Do not use decimals. 4.Prepare the journal entry to record $2,700,000 of accounts receivable collected in 2018. Do not use decimals. 5.Compute the net realizable value (net accounts receivable) presentation after the two journal entries to record 2018 sales and 2018 collections. Do not use decimals. 6.Prepare the journal entry to record $25,000 of write-offs in 2018. Do not use decimals. 7.Compute the net realizable value…arrow_forwardQuestion: Perform the following accounting for the receivables of A & G, an accounting firm, at December 31, 2014. 1. Start with the beginning balances for these T-accounts: Accounts Receivable, $80,000 Allowance for Uncollectible Accounts, $9,000 Post the following 2014 transactions to the T-accounts: a. Service revenue of $850,000, all on account b. Collections on account, $790,000 c. Write-offs of uncollectible accounts, $7,000 d. Bad debt expense (allowance method), $8,000 2. What are the ending balances of Accounts Receivable and Allowance for Uncollectible Accounts? 3. Show two ways A & G could report accounts receivable on its balance sheet at December 31, 2014. Please explain & show steps, thank you.arrow_forward
- 12. J&Co has credit sale of OMR 900,00 for year 2017. On December 31, 2017, the company's Allowance for doubtful Accounts has a Zero balance. J&Co prepare a schedule of its December 31, 2017, account receivable by age. On the basis of past experience, it also estimate the percent of receivable in each age category that will become uncollectable. This information is summarized here: Analysis of balances Accounts Age of Receivable Not due (Under 30days) 1 to 30 days past due 31 to 60 days past due 61-90 days past due 90-120 days past due Over 120 days past due Total Amount % 399,600 2 287,800 10 180,000 15 6,000 20 10,000 40 16,600 100 OMR 900,000| Required. a. Compute the amount needed in the Allowance for Doubtful Accounts at December 31, 2017, using the aging of accounts receivable method. b. Prepare the journal entry to record bad debts expense at December 31, 2017. Show how accounts receivable would be presented on the Balance sheet at Decemberarrow_forwardInterpreting the Accounts Receivable FootnoteHP Inc. reports the following in its 2018 10-K report. October 31(in millions) 2018 2017 Accounts receivable $5,113 $4,414 Footnotes to the company's 10-K provide the following additional information relating to its allowance for doubtful accounts. For the fiscal years ended October 31(in millions) 2018 2017 2016 Allowance for doubtful accounts-accounts receivable Balance, beginning of period $101 $107 $80 Provision for doubtful accounts 57 30 65 Deductions, net of recoveries (29) (36) (38) Balance, end of period $129 $101 $107 (a) What is the gross amount of accounts receivables for HP in fiscal 2018 and 2017? ($ millions) 2018 2017 Gross accounts receivable Answer Answer (b)What is the percentage of the allowance for doubtful accounts to gross accounts receivable for 2018 and 2017? (Round your answers to two decimal places.) ($ millions) 2018 2017 Percentage of uncollectible…arrow_forwardInterpreting the Accounts Receivable FootnoteHewlett-Packard Company reports the following in its 2015 10-K report. October 31(in millions) 2015 2014 Accounts receivable $13,363 $13,832 Footnotes to the company's 10-K provide the following additional information relating to its allowance for doubtful accounts. For the fiscal years ended October 31(in millions) 2015 2014 2013 Allowance for doubtful accounts-accounts receivable Balance, beginning of period $232 $332 $464 Provision for doubtful accounts 46 25 23 Deductions, net of recoveries (89) (125) (155) Balance, end of period $189 $232 $332 (a) What is the gross amount of accounts receivables for Hewlett-Packard in fiscal 2015 and 2014? ($ millions) 2015 2014 Gross accounts receivable Answer? Answer? (b)What is the percentage of the allowance for doubtful accounts to gross accounts receivable for 2015 and 2014? (Round your answers to two decimal places.) ($ millions) 2015 2014…arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College