The Allowance for Impairment on Receivables in the accounts of Excel Co. at 1 October 2020 was $21,000 and the Receivables balance was $250,100. During the year, the business made total sales of $379,900 (including cash sales of $180,900). $12,900 of defective goods were returned by credit customers. Cash receipt of $400,000 was received from these trade receivables during the financial year. $7,000 were to be written off at the financial year end of 30 September 2021. Based on past experience, Excel Co. wishes to set the allowance at 20% of the receivables. Which of the following are the correct journal entries to record the impairment loss on receivables for the year ended 30 September 2021? O 1) DR Impairment loss on Receivables $7,810 CR Allowance for Impairment on Receivables $7,810 O 2) DR Allowance for Impairment on Receivables $7,810 CR Impairment on Receivables $7,810 $8,160 $8,160 3) DR Impairment loss on Receivables CR Allowance for Impairment on Receivables DR Allowance for Impairment on Receivables $8,160 CR Impairment on Receivables 4) $8,160

The Allowance for Impairment on Receivables in the accounts of Excel Co. at 1 October 2020 was $21,000 and the Receivables balance was $250,100. During the year, the business made total sales of $379,900 (including cash sales of $180,900). $12,900 of defective goods were returned by credit customers. Cash receipt of $400,000 was received from these trade receivables during the financial year. $7,000 were to be written off at the financial year end of 30 September 2021. Based on past experience, Excel Co. wishes to set the allowance at 20% of the receivables. Which of the following are the correct journal entries to record the impairment loss on receivables for the year ended 30 September 2021? O 1) DR Impairment loss on Receivables $7,810 CR Allowance for Impairment on Receivables $7,810 O 2) DR Allowance for Impairment on Receivables $7,810 CR Impairment on Receivables $7,810 $8,160 $8,160 3) DR Impairment loss on Receivables CR Allowance for Impairment on Receivables DR Allowance for Impairment on Receivables $8,160 CR Impairment on Receivables 4) $8,160

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 2CE: Tonis Tech Shop has total credit sales for the year of 170,000 and estimates that 3% of its credit...

See similar textbooks

Similar questions

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.
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.
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.
Allowance Method for Accounting for Bad Debts At the beginning of 2016, EZ Tech Companys Accounts Receivable balance was $140,000, and the balance in Allowance for Doubtful Accounts was $2,350 (Cr.). EZ Techs sales in 2016 were $1,050,000, 80% of which were on credit. Collections on account during the year were $670,000. The company wrote off $4,000 of uncollectible accounts during the year. Required Prepare summary journal entries related to the sale, collections, and write-offs of accounts receivable during 2016. Prepare journal entries to recognize bad debts assuming that (a) bad debts expense is 3% of credit sales and (b) amounts expected to be uncollectible are 6% of the year-end accounts receivable. What is the net realizable value of accounts receivable on December 31, 2016, under each assumption in part (2)? What effect does the recognition of bad debts expense have on the net realizable value? What effect does the write-off of accounts have on the net realizable value?
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.
The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2021, the allowance account had a credit balance of $75,000. Credit sales for 2021 totaled $2,400,000 and the year-end accounts receivable balance was $490,000. During this year, $73,000 in receivables were determined to be uncollectible. Manda Panda anticipates that 3% of all credit sales will ultimately become uncollectible. The fiscal year ends on December 31.Required:1. Does this situation describe a loss contingency? Explain.2. What is the bad debt expense that Manda Panda should report in its 2021 income statement?3. Prepare the appropriate journal entry to record the contingency.4. What is the net accounts receivable value Manda Panda should report in its 2021 balance sheet?
Pincus Associates uses the allowance method to account for bad debts. During 2021, its first year of operations, Pincus provided a total of $239,000 of services on account. In 2021, the company wrote off uncollectible accounts of $9,600. By the end of 2021, cash collections on accounts receivable totaled $201,600. Pincus estimates that 10% of the accounts receivable balance at 12/31/2021 will prove uncollectible. Required:1. & 2. What journal entry did Pincus record to write off uncollectible accounts during 2021 and to recognize bad debt expense for 2021?
Pincus Associates uses the allowance method to account for bad debts. During 2021, its first year of operations, Pincus provided a total of $290,000 of services on account. In 2021, the company wrote off uncollectible accounts of $11,700. By the end of 2021, cash collections on accounts receivable totaled $245,700. Pincus estimates that 15% of the accounts receivable balance at 12/31/2021 will prove uncollectible.Required:1. & 2. What journal entry did Pincus record to write off uncollectible accounts during 2021 and to recognize bad debt expense for 2021? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
During August 2024, Yond Company recorded the following: • Sales of $51,100 ($44,000 on account; $7,100 for cash). Ignore Cost of Goods Sold. • Collections on account, $33,800. • Write-offs of uncollectible receivables, $1,900. • Recovery of receivable previously written off, $200. Date Aug. Accounts and Explanation Debit Credit Requirements Journalize Yond's transactions during August 2024, assuming Yond uses the direct write-off method. 1. 2. Journalize Yond's transactions during August 2024, assuming Yond uses the allowance method.
The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2018, theallowance account had a credit balance of $75,000. Credit sales for 2018 totaled $2,400,000 and the year-endaccounts receivable balance was $490,000. During this year, $73,000 in receivables were determined to be uncollectible. Manda Panda anticipates that 3% of all credit sales will ultimately become uncollectible. The fiscal yearends on December 31.Required:1. Does this situation describe a loss contingency? Explain.2. What is the bad debt expense that Manda Panda should report in its 2018 income statement?3. Prepare the appropriate journal entry to record the contingency.4. What is the net accounts receivable value Manda Panda should report in its 2018 balance sheet?
During August 2024, Texit Company recorded the following: • Sales of $37,000 ($22,000 on account; $15,000 for cash). Ignore Cost of Goods Sold. • Collections on account, $11,800. • Write-offs of uncollectible receivables, $1,480. • Recovery of receivable previously written off, $600. C Requirements Journalize Texit's transactions during August 2024, assuming Texit uses the direct write-off method. Journalize Texit's transactions during August 2024, assuming Texit uses the allowance method. 1. 2. Requirement 1. Journalize Texit's transactions during August 2024, assuming Texit uses the direct write-off method. Sales of $37,000 ($22,000 on account; $15,000 for cash). Ignore Cost of Goods Sold. (Record debits first, then credits. Select the explanation on the last line of the journal entry table. Prepare a single compound journal entry.) Credit Accounts and Explanation Debit Date Aug.
During August 2024, Texit Company recorded the following: • Sales of $37,000 ($22,000 on account: $15,000 for cash). Ignore Cost of Goods Sold. • Collections on account, $11,800. • Write-offs of uncollectible receivables, $1,480. • Recovery of receivable previously written off, $600. Requirements Journalize Texit's transactions during August 2024, assuming Texit uses the direct write-off method. Journalize Texit's transactions during August 2024, assuming Texit uses the allowance method. 1. 2.