Based on the above and the results of your audit, determine the following: The adjusted balance of AACA's "1 to 6 months" accounts receivables? The adjusted balance of AACA's "over 6 months" accounts receivable is? The adjusted accounts receivable balance on December 31, 2022 should be? The required balance of the allowance for bad debts account on December 31, 2022, is? The entry to adjust the allowance for bad debts account is?
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
PLEASE ANSWER ASAP
Problem No. 3
You are auditing the accounts receivable and the related allowance for
The following data are available:
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General Ledger Accounts Receivable |
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2022 |
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Dec. 31 |
381,600 |
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Allowance for Bad Debts |
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2022 |
2022 |
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Jul. 31 |
GJ Write-off |
7,200 |
Jan. 1 |
Balance |
9,000 |
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Dec. 31 |
GJ - Provision |
21,600 |
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Summary of Aging Schedule |
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The summary of the subsidiary ledger balances as of December 31, 2022, is shown below: |
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Debit balances |
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Under one month |
P 162,000 |
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One to six months |
165,600 |
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Over six months |
68,400 |
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P 396,000 |
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Credit balances |
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Mark Co. |
P 3,600 |
OK; additional billing in Jan. 2023 |
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Lady Co. |
6,300 |
Should have been credited to Ivan Co.* |
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8,100 |
Advance on a sales contract |
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P 18,000 |
*Account is in “one to six months” classification.
The customer’s ledger is not in agreement with the accounts receivable control. The client instructs the auditor to adjust the control to the subsidiary ledger after corrections are made.
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Allowance for Bad Debts Requirements |
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It is agreed that 1 percent is adequate for accounts under on month. Accounts one to six months are expected to require an allowance of 2 percent. Accounts over six months are analyzed as follows: |
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Definitely bad |
P 21,600 |
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Doubtful (estimated to be 50% collectible) |
10,800 |
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Apparently good, but slow (estimated to be 90% collectible) |
36,000 |
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Total |
P68,400 |
Based on the above and the results of your audit, determine the following:
- The adjusted balance of AACA's "1 to 6 months" accounts receivables?
- The adjusted balance of AACA's "over 6 months" accounts receivable is?
- The adjusted accounts receivable balance on December 31, 2022 should be?
- The required balance of the allowance for bad debts account on December 31, 2022, is?
- The entry to adjust the allowance for bad debts account is?
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