FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Concept explainers

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 t…
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 ari…
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Answer for problem D and E 

**Accounts Receivable Analysis for Luxury Cruises** The following accounts receivable information pertains to Luxury Cruises, aiding in the assessment of uncollectible accounts for the year. ### Past-Due Category 1. **0–30 days** - **Accounts Receivable Total:** $1,166,350 - **Percentage Uncollectible:** 15% 2. **31–90 days** - **Accounts Receivable Total:** $577,870 - **Percentage Uncollectible:** 33% 3. **Over 90 days** - **Accounts Receivable Total:** $324,450 - **Percentage Uncollectible:** 48% ### Tasks A. **Determine the estimated uncollectible bad debt for Luxury Cruises in 2018** using the balance sheet aging of receivables method. B. **Record the year-end 2018 adjusting journal entry for bad debt.** C. **Assume there was a previous debit balance in Allowance for Doubtful Accounts of $187,450;** record the year-end entry for bad debt, taking this into consideration. D. **Assume there was a previous credit balance in Allowance for Doubtful Accounts of $206,770;** record the year-end entry for bad debt, taking this into consideration. E. **On January 24, 2019, Luxury Cruises identifies Landon Walker’s account as uncollectible** in the amount of $4,650. Record the entry for identification. --- This structured analysis helps Luxury Cruises manage its accounts receivable effectively by recognizing potential credit risks and adjusting financial records accordingly.
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Transcribed Image Text:**Accounts Receivable Analysis for Luxury Cruises** The following accounts receivable information pertains to Luxury Cruises, aiding in the assessment of uncollectible accounts for the year. ### Past-Due Category 1. **0–30 days** - **Accounts Receivable Total:** $1,166,350 - **Percentage Uncollectible:** 15% 2. **31–90 days** - **Accounts Receivable Total:** $577,870 - **Percentage Uncollectible:** 33% 3. **Over 90 days** - **Accounts Receivable Total:** $324,450 - **Percentage Uncollectible:** 48% ### Tasks A. **Determine the estimated uncollectible bad debt for Luxury Cruises in 2018** using the balance sheet aging of receivables method. B. **Record the year-end 2018 adjusting journal entry for bad debt.** C. **Assume there was a previous debit balance in Allowance for Doubtful Accounts of $187,450;** record the year-end entry for bad debt, taking this into consideration. D. **Assume there was a previous credit balance in Allowance for Doubtful Accounts of $206,770;** record the year-end entry for bad debt, taking this into consideration. E. **On January 24, 2019, Luxury Cruises identifies Landon Walker’s account as uncollectible** in the amount of $4,650. Record the entry for identification. --- This structured analysis helps Luxury Cruises manage its accounts receivable effectively by recognizing potential credit risks and adjusting financial records accordingly.
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Journal entries refers to the entries which are passed by the companies at the end of the accounting year or period and it records all the business event or transactions into the books of account.

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