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…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Current Attempt in Progress At the beginning of the current period, Whispering Ltd. had balances in Accounts Receivable of £288,000 and in Allowance for Doubtful Accounts of £9,300 (credit). During the period, it had net credit sales of £860,000 and collections of £817,000. It wrote off as uncollectible accounts receivable of £6,800. However, a £3,600 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total £24,300 at the end of the period. (Omit cost of goods sold entries.) (a) Prepare the entries to record sales and collections during the period.. (b) Prepare the entry to record the write-off of uncollectible accounts during the period. (c) Prepare the entries to record the recovery of the uncollectible account during the period. (d) Prepare the entry to record bad debt expense for the period.
At the beginning of the current period, Waterway Industries had balances in Accounts Receivable of $190,800 and in Allowance for Doubtful Accounts of $9,670 (credit). During the period, it had net credit sales of $730,800 and collections of $749,620. It wrote off as uncollectible accounts receivable of $7,511. However, a $3,339 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $23,000 at the end of the period. (Omit cost of goods sold entries.) (a) Prepare the entries to record sales and collections during the period. (b) Prepare the entry to record the write-off of uncollectible accounts during the period. (c) Prepare the entries to record the recovery of the uncollectible account during the period. (d) Prepare the entry to record bad debt expense for the period. (Credit account titles are automatically indented when…
A company reports a year end credit sales in the amount of 390,000 and accounts receivable of $85,500. The company uses the income statement method to report bad debt estimation. The estimation percentage is 3.5%. There is a current debut balance of $2,000 in the bad debt account and a $2,000 credit balance in the allowance for doubtful accounts. Record the journal entry using the income statement method. Then record this transaction using T accounts
An aging of a company's accounts receivable indicates that the estimate of uncollectible accounts totals $4,139. If Allowance for Doubtful Accounts has a $1,071 debit balance, the adjustment to record the bad debt expense for the period will require a Select the correct answer. debit to Bad Debt Expense for $1,071. debit to Bad Debt Expense for $5,210. credit to Allowance for Doubtful Accounts for $4,139. debit to Bad Debt Expense for $4,139.
An aging of a company's accounts receivable indicates that $5,539 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $900 credit balance, the adjustment to record bad debts for the period will require a credit to the Allowance for Doubtful Accounts of:
HIRDT CO. USES THE PERCENTAGE-OF- RECEIVABLES BASIS TO RECORD BAD DEBT EXPENSE AND CONCLUDES THAT 3% OF ACCOUNTS RECEIVABLE WILL BECOME UNCOLLECTIBLE. ACCOUNTS RECEIVABLE ARE $401,100 AT THE END OF THE YEAR, AND THE ALLOWANCE FOR DOUBTFUL ACCOUNTS HAS A CREDIT BALANCE OF $3,110. IF THE ALLOWANCE FOR DOUBTFUL ACCOUNTS HAD A DEBIT BALANCE OF $890 INSTEAD OF A CREDIT BALANCE OF $3,110, PREPARE THE ADJUSTING JOURNAL ENTRY FOR BAD DEBT EXPENSE.
Bad debts accounts are estimated to be doubtful at 5% of the accounts receivable. An extract from the trial balance shows the following balances: Accounts Receivable P200,000 Allowance for Bad Debts, credit 2,000 The net realizable value of accounts receivable after the adjustment for the current reporting period is: Select the correct response: 198,000 190,000 188,000 200,000
The following information applies to the questions displayed below.] On December 31, Jarden Company's Allowance for Doubtful Accounts has an unadjusted credit balance of $ 14,500. Jarden prepares a schedule of its December 31 accounts receivable by age. Accounts Receivable Age of Accounts Receivable Expected Percent Uncollectible $ 830,000 Not yet due 1.25 % 254,000 1 to 30 days past due 2.00 86,000 31 to 60 days past due 6.50 38,000 61 to 90 days past due 32.75 12,000 Over 90 days past due 68.00 2. Prepare the adjusting entry to record bad debts expense at December 31. Record the estimated ba debts. Required information 1 Record the estimated bad debts. Note: Enter debits before credits. Date December 31 General Journal Debit Credit Record entry Clear entry View general journal
Data for the year ended December 31 are presented below. Sales (100% on credit) $2,100,000 Sales returns 150,000 Accounts Receivable (December 31) 420,000 Allowance for Doubtful Accounts (Before adjustment at December 31) 25,000 Estimated amount of uncollected accounts based on an aging analysis 75,000 If the company uses the aging of accounts receivable method to estimate its bad debts, what will be the net realizable value of its accounts receivable after the adjustment for bad debt expense?
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Vaughn Manufacturing has outstanding accounts receivable totaling $1.26 million as of December 31 and sales on credit during the year of $6.50 million. There is also a debit balance of $6200 in the allowance for doubtful accounts. If the company estimates that 2% of its accounts receivable will be uncollectible, what will be the balance in the allowance for doubtful accounts after the year-end adjustment to record bad debt expense? O $31400. $25200. $19000. $25076.
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?

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