On 31 Dec, Blue Ocean Pte Ltd's unadjusted trial balance includes the following items:Accounts ReceivablesAllowance For Doubtful Accounts$210,000 debit$2,500 creditThere was objective evidence that 15% of a $20,000 debt owed by a debtor, Red SeaLogistics, would most probably be uncollectible.An aging analysis of the rest of the accounts receivables indicated that an estimated 5%of these accounts would not be collectible.The company uses the allowance method to value its accounts receivable.Present the adjusting entry to record Bad Debt Expenses. Show narration and workings.Explain why using the allowance method is better than the direct write-off method.

**Allowance Method:** The allowance method anticipates and records potential bad debts in advance,…

Answered: On 31 Dec, Blue Ocean Pte Ltd's…

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter16: Accounting For Accounts Receivable

Section: Chapter Questions

Problem 3CP: At the end of 20-3, Martel Co. had 410,000 in Accounts Receivable and a credit balance of 300 in...

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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.
A company uses the percent of receivables method to estimate doubtful accounts. At the end of the calendar year, it has the following unadjusted balances: Accounts Receivable, debit balance of Php 280,000 and Allowance for Doubtful Accounts, debit balance of Php 2,000, Assuming 6% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible, what amount should be debited to Bad Debts Expense?
At 31 December 20X8, Small Ltd. reported gross accounts receivable of $2,481,800. Investigation showed the following: The credit balance in the allowance for doubtful accounts was $182,400 after write-offs for the year but before any bad debt adjustment. Bad debt expense is based on a percentage of receivables. Based on the latest available facts, $280,000 will not be collected due to collection issues. Terms of 1/10, n/30 were granted to all customers. Accounts receivable were recorded gross, and the discounts taken were recorded when taken by the customers in a discounts account, reported contra to the sales account. Estimated discounts inherent in the closing accounts receivable balance were $30,600. The allowance for sales discounts account was established at $29,800 last year and has not been adjusted since. Prepare year-end adjusting entries with respect to accounts receivable. Show how the net accounts receivable would appear on the statement of financial position on 31…
On December 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable, debit balance of $98,400; Allowance for Doubtful Accounts, credit balance of $1,081. What amount should be debited to Bad Debts Expense, assuming 5% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible? Multiple Choice $6,001. $2,947. $3,839. $1,081. $4,920.
Blackhorse Productions, Inc., used the aging of accounts receivable method to estimate that its Allowance for Doubtful Accounts should be $23,550. The account had an unadjusted credit balance of $11,900 at that time. a. The appropriate bad debt adjustment was recorded. b. Later, an account receivable for $2,900 was determined to be uncollectible and was written off. Required: For each transaction listed above, indicate the amount and direction +for increase or -for decrease) of effects on the financial statement accounts and on the overall accounting equation. (Enter any decreases to Assets, Liabilities, or Stockholders Equity with a minus sign.) Assets Liabilities Stockholders' Equity
On December 31 of the current year, the unadjusted trial balance of a company using the percent of receivables method to estimate bad debt included the following: Accounts Receivable, debit balance of $97,500; Allowance for Doubtful Accounts, credit balance of $991. What amount should be debited to Bad Debts Expense, assuming 6% of outstanding accounts receivable at the end of the current year are estimated to be uncollectible?
Blackhorse Productions, Incorporated, used the aging of accounts receivable method to estimate that its Allowance for Doubtful Accounts should be $22,550. The account had an unadjusted credit balance of $11,400 at that time. The appropriate bad debt adjustment was recorded. Later, an account receivable for $2,400 was determined to be uncollectible and was written off. Required: For each transaction listed above, indicate the amount and direction (+ for increase or − for decrease) of effects on the financial statement accounts and on the overall accounting equation. (Enter any decreases to Assets, Liabilities, or Stockholders Equity with a minus sign.)
Marigold Corp. uses the percentage-of-receivables basis to record bad debt expense and concludes that 3% of accounts receivable will become uncollectible. Accounts receivable are $416,900 at the end of the year, and the allowance for doubtful accounts has a credit balance of $2,545. (a) Prepare the adjusting journal entry to record bad debt expense for the year. If the allowance for doubtful accounts had a debit balance of $950 instead of a credit balance of $2,545, prepare the adjusting journal entry for bad debt expense. (b) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit (a) (b)
XZ company provided the following accounts abstracted from the unadjusted trial balance at year-end: A/R: 5,000,000(debit) Allowance for Doubtful Accounts: 50,000 (debit) Gross Credit Sales: 20,000,000 (credit) The entity estimated that 3% of the gross accounts receivable will become uncollectible. Assuming a P500,000 sales returns for the year, what amount should be recognized as doubtful accounts expense for the period?
On December 31 of the current year the unadjusted trial balance of a company using the Percent of receivables method to estimate bad debt included in the following: Accounts receivable debt balance of 97,700; Allowance for doubtful accounts, credit balance of 1,011. what amount should be debited to bad debts expense, assuming 4% of outstanding account receivable at the end of the current year are estimated to be uncollected
The following accounts were abstracted from Todd Company's unadjusted trial balance at December 31: Accounts Receivable Allowance for Doubtful Accounts Net Credit Sales Select one: Todd Company estimates that 2% of net credit sales will become uncollectible. After adjustment at December 31, the Bad Debt Expense should have a balance of: a. $26,000 Debit $800,000 b. $60,000 Dic. $70,000 Od. $32,000 e. $86,000 Credit 10,000 $3,000,000

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