AutoSave OFFHome Insert DrawPastePage 47 of 95CalibriB I U20DesignVv16916 words50abX2VLayoutXΑ Α΄AReferencesAa ▾ AΑνEnglish (United States)Mailings=ReviewVVW= Packet Lecture-4View12/31싫VAccessibility: InvestigateTell me30,000VEstimating Uncollectible AccountsAn estimate of bad debts is made at the end of the accounting period to match the cost ofcredit sales (bad debt expense) with the revenue credit sales allowed the company to recordduring the period. The estimate is incorporated in the company's books through an ADJUSTINGENTRY and the entry increases the allowance for uncollectible accounts and bad debt expense.Saved to my Mac ✓Percent of Receivables Method (an allowance method)management estimates a percent of ending accounts receivable they expect to be uncollectiblethe ending balance of the Allowance for Uncollectible Accounts (AUA) is determined based onthe estimate (% of uncollectible accounts x ending balance of A/R, "% of A/R"). Example:Management estimates 5% of their $50,000 of remaining accounts receivables (ending balance)to be uncollectible. Therefore, the ending balance in the AUA needs to be $2,500 (5% x$50,000).A/R30,000AaBb CcDdEerecord the adjusting entry to get the ending balance in the Allowance for uncollectible accounts(AUA) to be equal to the amount computed (% of A/R). Example: The ending balance in theAUA needs to be $2,500. Before the adjusting entry the balance is $200 credit. To get thebalance to be $2,500, an adjusting entry for $2,300 is needed.Bad Debt Expense1 JRC NormalPractice At the end of the year, D Company's balance in the allowance for uncollectibleaccounts (AUA) was $500 (credit) before adjusting entries. The balance in Accounts Receivableis $30,000. The company estimates that 15% of the accounts will not be collectible. Preparethe adjusting entry for uncollectible accounts using the precent of receivables method.AaBbCcDdEeA/RCaptionAaBb CcDdFHeading 1What should D report as bad debt expense on their 12/31 Income Statement?D would report net accounts receivable on their 12/31 Balance Sheet at:Allowance for uncollectible accounts500Allowance for uncollectible accounts500$Allowance for uncollectible accountsAaBbCcDdEHeading 2AaBbCcDdEHeading 3FocusAaBbCcDdEHeading 4EShareFBIEditingStyles DictatePaneCommentsEEditor100%

Allowance for Uncollectable Amount Because it lowers the value of an asset—in this case, the…

Practice At the end of the year, D Company's balance in the allowance for uncollectible accounts (AUA) was $500 (credit) before adjusting entries. The balance in Accounts Receivable is $30,000. The company estimates that 15% of the accounts will not be collectible. Prepare the adjusting entry for uncollectible accounts using the precent of receivables method. 12/31 30,000 A/R Bad Debt Expense 30,000 Allowance for uncollectible accounts 500 What should D report as bad debt expense on their 12/31 Income Statement? D would report net accounts receivable on their 12/31 Balance Sheet at: A/R Allowance for uncollectible accounts 500 $ $ Allowance for uncollectible accounts

Practice At the end of the year, D Company's balance in the allowance for uncollectible accounts (AUA) was $500 (credit) before adjusting entries. The balance in Accounts Receivable is $30,000. The company estimates that 15% of the accounts will not be collectible. Prepare the adjusting entry for uncollectible accounts using the precent of receivables method. 12/31 30,000 A/R Bad Debt Expense 30,000 Allowance for uncollectible accounts 500 What should D report as bad debt expense on their 12/31 Income Statement? D would report net accounts receivable on their 12/31 Balance Sheet at: A/R Allowance for uncollectible accounts 500 $ $ Allowance for uncollectible accounts

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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Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $950,000, Allowance for Doubtful Accounts has a credit balance of $8,500, and sales for the year total $4,280,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $29,800. a. Determine the amount of the adjusting entry for uncollectible accounts. b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense c. Determine the net realizable value of accounts receivable.
Percent of Sales Method At the end of the current year, Accounts Receivable has a balance of $635,000; Allowance for Doubtful Accounts has a debit balance of $5,500; and sales for the year total $2,860,000. Bad debt expense is estimated at 1.25% of sales. 1. Determine the amount of the adjusting entry for uncollectible accounts. 2. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense $635,000 ✓ 3. Determine the net realizable value of accounts receivable.
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ABC Co. has the following information before any year-end adjustment. Accounts receivable, Dec. 31 600,000 Allowance for doubtful accounts, Jan. 1 18,000 (Dr.) 2% Percentage of receivables 30. Write-offs and recoveries during the year amounted to P22,800 and $3,000, respectively. How much is the bad debts expense for the year? A. 13,800 B. 26,800 C. 49,800 D. 52,800
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17.The following information is provided: Unadjusted balance in Allowance for Doubtful Accounts $1,100 (debit)Accounts Receivable, December 31 245,500Sales Returns and Allowances 5,500Sales 850,000Sales Discounts 15,000 Required:1. Prepare the adjusting entry if bad debts are estimated to be 1.5% of net sales.2. Compute the amount of the adjusting entry if bad debts are estimated to be 3% of ending accounts receivable.
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Allowance for Doubtful Accounts has a credit balance of $613 at the end of the year (before adjustment), and bad debt expense is estimated at 3% of credit sales. If credit sales are $604,400, the amount of the adjusting entry to journalize the estimated uncollectible accounts receivable is a. $18,745 b. $17,519 c. cannot determine without more information d. $18,132
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