1. A company maintains an allowance for doubtful accounts related to its credit sales. For each credit sale, 1% is estimated to be uncollectible. A company recently made a credit sale of $50,000, and the cost of goods sold related to the transaction was $40,000. What journal entries should be made related to this sale? 2. A company estimates its future warranty obligations at the time a sale is made. This estimate is 2% of sales. The company recently sold $100,000 in a cash sale that had an associated cost of goods sold of $70,000. What journal entries should be made related to this sale?
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- A customer was unable to pay the accounts receivable on time in the amount of $34,000. The customer was able to negotiate with the company and transferred the accounts receivable into a note that includes interest, along with an up-front cash payment of $6,000. The note maturity date is 24 months with a 15% annual interest rate. What is the entry to recognize this transfer?On June 1, Phillips Corporation sold, with recourse, a note receivable from a customer to a bank. The note has a face value of 15,000 and a maturity value (principal plus interest) of 15,400. The discount is calculated to be 385, and the accrued interest income is 100. The recourse liability is estimated to be 1,000. Prepare the journal entry of Phillips to record the sale of the note receivable.1. Kinney Corporation estimates its uncollectible accounts as a percentage of its credit sales. The rate it uses is 3% and in 2018, its credit sales were $1,500,000. Required: a. Prepare journal entries to record the bad debts expense for the year. b. If Allowance for an uncollectible account has a credit balance of $60,000 before entries in (a) above, show how Accounts Receivable will be presented in the Balance Sheet of Kinney Corporation.
- 1. AB Company has a debit balance of $4500 in Allowance for Doubtful Accounts. At year end the Accounts Receivable Balance is $1,000,000. AB Company expects 10% of this will be uncollectible. Prepare the journal entry to record estimated uncollectibles. Account Debit Credit 2. AB Company deems the balance of $5800 from CD company to be uncollectible. Prepare the journal entry to write off the balance. Account Debit Credit 3. CD Company pays the $5800 that was previously written off. Prepare the required journal entries. Account Debit CreditAt the beginning of the current year, Art Company had a credit balance of P260,000 in the allowance for uncollectible accounts. Based on the past experience, 2% of credit sales would be uncollectible. During the current year, the entity wrote off P325,000 of uncollectible acCounts. Credit sales for the year totaled P9,000,000. What is the adjusted balance of allowance for uncollectible accounts?A company is getting ready to publish their annual financial statements. They have the following beginning balances: Beginning balance for gross accounts receivable (A) $2,000 beginning balance for Allowance for doubtful accounts (XA) $300 1.) They make $10,000 in credit sales in the current period. Assume that 1% of credit sales are typically not collectible. If the income statement method is used, -Ending balance for the allowance for doubtful accounts= $1,300 -Bad debt expense=$1,000 2.) assume that no cash collections were made during the accounting period and continue to assume that the $10,000 In credit sales were made in the current period. Suppose that 5% of accounts receivable are typically not collectible. If the balance sheet method is used, Bad debt expense= $300 Ending balance for the allowance for doubtful accounts= $600 QUESTION: From your analysis in question 1 and 2, which method will result in a higher net income? Why?
- At the beginning of current year, had a credit balance of P260,000 in the allowance for uncollectible accounts. Based on past experience, 2% of credit sales would be uncollectible. During the current year, the entity wrote off P325,000 of uncollectible accounts. Credit sales for the year totalled P9,000,000. What amount should be reported as allowance for uncollectible accounts at year-end?1.) Beltline Co. had credit sales of $100,000 for the year, and based on experience estimates that approximately 1% of these sales will be uncollectible. Under the percent of sales method, a.the adjusting entry to record the uncollectible sales would involve a debit to Allowance for Doubtful Accounts and a credit to Bad Debt Expense. b.the estimated uncollectible sales should not be recorded until there is firm evidence that a customer will not pay. c.the estimated bad debt expense is $1,000. d.the estimated bad debt expense is $10,000. 2.) Under the percentage of receivables method theory, a.the majority of accounts receivable portion will not be collected. b.some portion of the existing accounts receivable will not be collected. c.the percentage of uncollectible accounts is calculated as Average Uncollectible Accounts divided by Average Accounts Receivable. d."some portion of the existing accounts receivable will not be collected" and "the percentage of uncollectible…Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2021, net credit sales totaled $4,500,000, and the estimated bad debt percentage is 1.5%. No previously written-off accounts receivable were reinstated during 2021. The allowance for uncollectible accounts had a credit balance of $42,000 at the beginning of 2021 and $40,000, after adjusting entries, at the end of 2021.Required:1. What is bad debt expense for 2021 as a percent of net credit sales?2. Assume Ervin makes no other adjustment of bad debt expense during 2021. Determine the amount of accounts receivable written off during 2021.3. If the company uses the direct write-off method, what would bad debt expense be for 2021?
- A company has a 30-day credit terms to its customers. It has a total of P120,000 in their accounts receivable, along with an annual revenue of P800,000. Compute for the Accounts Receivable days. Did the company meet its credit terms for the customers? Why? What advise can you give to the company regarding proper accounts receivables management?Present the journal entry necessary to record each of the following items; assuming King Company uses the Allowance method of accounting for Uncollectible Accounts (Bad Debts). 1. Uncollectible Accounts Expense for the year is estimated to be 6% of Net Sales. Net Sales for the year are $100,000 and the Allowance account has a $600 credit balance 2. A $20,000 note is received from a customer on account. 3. The $800 balance in an individual customer's account is written off as uncollectible. 4. The company received $200 from a customer whose account had been previously written off as uncollectible. 5Radiant Company sells a variety of imported goods. By selling on credit, Radiant cannot expect to collect 100% of its accounts receivable. At December 31, 2019, Radiant reported the following in its statement of financial position: Accounts receivable P2,197,500 Less allowance for bad debts ( 133,500) Accounts receivable, net P2,064,000 During the year ended December 31, 2020, Radiant earned sales revenue of P537,702,500 and collected cash of P528,070,500 from customers. Assume bad debts expense for the year was 1% of sales revenue and that Radiant wrote off uncollectible accounts receivable totaling P5,439,500. Required:Compute for the following a.Accounts receivable balance at December 31, 2020 b.December 31, 2020 balance of the Allowance for Bad Debts account