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What is the average balance of receivables greater than 120 days due $

What is the average balance of receivables greater than 120 days due $

Financial Accounting
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter9: Receivables
Section: Chapter Questions
Problem 10E: Using data in Exercise 9-9, assume that the allowance for doubtful accounts for Waddell Industries...
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What is the average balance of receivables greater than 120 days due $ 

 

a. Compute the ending balance in the Allowance for Doubtful Accounts at December 31. $167,500 b. Prepare its entries (1) to write off uncollectible accounts and (2) to recognize bad debt expense. Cr. Ref. Account Name Dr. 220,000 1. Dec. 31 Allowance for Doubtful Accounts Accounts Receivable To write-off uncollectible accounts 2. Dec. 31 Bad Debt Expense Allowance for Doubtful Accounts To recognize bad debt expense Less than 30 days 31-90 days. 91-120 days Greater than 120 days 95% 90% 70% 40% 0 187,500 0 2,600 1,000 733 1.600 0✓ c. At the end of the year, the allowance is estimated based on the following aging of accounts receivable. What is the estimated Allowance for Doubtful Accounts balance at December 31? Accounts Probability of Number of Receivable Collection Accounts $650,000 200,000 110,000 40,000 $1,000,000 Allowance for Doubtful Accounts balance, year-end $ 109,500 220,000✔ 0✔ 187,500 d. What information is available from the aging analysis in part c that is not apparent when using the percentage of credit sales approach? Percentage of receivables older than 91 days: 15 ✔% Average balance of receivables greater than 120 days due: $ 100,000 x
Transcribed Image Text:a. Compute the ending balance in the Allowance for Doubtful Accounts at December 31. $167,500 b. Prepare its entries (1) to write off uncollectible accounts and (2) to recognize bad debt expense. Cr. Ref. Account Name Dr. 220,000 1. Dec. 31 Allowance for Doubtful Accounts Accounts Receivable To write-off uncollectible accounts 2. Dec. 31 Bad Debt Expense Allowance for Doubtful Accounts To recognize bad debt expense Less than 30 days 31-90 days. 91-120 days Greater than 120 days 95% 90% 70% 40% 0 187,500 0 2,600 1,000 733 1.600 0✓ c. At the end of the year, the allowance is estimated based on the following aging of accounts receivable. What is the estimated Allowance for Doubtful Accounts balance at December 31? Accounts Probability of Number of Receivable Collection Accounts $650,000 200,000 110,000 40,000 $1,000,000 Allowance for Doubtful Accounts balance, year-end $ 109,500 220,000✔ 0✔ 187,500 d. What information is available from the aging analysis in part c that is not apparent when using the percentage of credit sales approach? Percentage of receivables older than 91 days: 15 ✔% Average balance of receivables greater than 120 days due: $ 100,000 x
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