Wildhorse Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Wildhorse's Accounts Receivable account was $584,900 and Allowance for Doubtful Accounts had a credit balance of $42,500. The year-end balance reported in the balance sheet for Allowance for Doubtful Accounts will be based on the aging schedule shown below. Days Account Outstanding Less than 16 days Between 16 and 30 days Between 31 and 45 days Between 46 and 60 days Between 61 and 75 days Over 75 days (to be written off) Amount Accounts Receivable $312,200 111.900 Net Accounts Receivable 86,000 40,900 eTextbook and Media 19,100 14,800 Probability of Collection 0.98 0.90 Less : Allowance for Doubtful Accounts 0.86 What is the appropriate balance for Allowance for Doubtful Accounts at year-end? 0.80 Balance for allowance for doubtful accounts 0.55 Show how accounts receivable would be presented on the balance sheet. 0.00 WILDHORSE CORPORATION Balance Sheet (Partial) $ $ 584900 61049 520031 61049

Wildhorse Corporation operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in Wildhorse's Accounts Receivable account was $584,900 and Allowance for Doubtful Accounts had a credit balance of $42,500. The year-end balance reported in the balance sheet for Allowance for Doubtful Accounts will be based on the aging schedule shown below. Days Account Outstanding Less than 16 days Between 16 and 30 days Between 31 and 45 days Between 46 and 60 days Between 61 and 75 days Over 75 days (to be written off) Amount Accounts Receivable $312,200 111.900 Net Accounts Receivable 86,000 40,900 eTextbook and Media 19,100 14,800 Probability of Collection 0.98 0.90 Less : Allowance for Doubtful Accounts 0.86 What is the appropriate balance for Allowance for Doubtful Accounts at year-end? 0.80 Balance for allowance for doubtful accounts 0.55 Show how accounts receivable would be presented on the balance sheet. 0.00 WILDHORSE CORPORATION Balance Sheet (Partial) $ $ 584900 61049 520031 61049

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter5: Sales And Receivables

Section: Chapter Questions

Problem 85APSA: Determining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto...

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Tonis Tech Shop has total credit sales for the year of 170,000 and estimates that 3% of its credit sales will be uncollectible. Allowance for Doubtful Accounts has a credit balance of 275. Prepare the adjusting entry at year-end for the estimated bad debt expense. (a) Based on an aging of its accounts receivable, Kyles Cyclery estimates that 3,200 of its year-end accounts receivable will be uncollectible. Allowance for Doubtful Accounts has a debit balance of 280 at year-end. Prepare the adjusting entry at year-end for the estimated uncollectible accounts.
Determining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto Parts had an accounts receivable balance of $31,800 and a balance in the allowance for doubtful accounts of $2,980 (credit). During the year, Tennyson had credit sales of $624,300, collected accounts receivable in the amount of $602,700, wrote off $18,600 of accounts receivable, and had the following data for accounts receivable at the end of the period: Required: 1. Determine the desired post adjustment balance in allowance for doubtful accounts. 2. Determine the balance in allowance for doubtful accounts before the bad debt expense adjusting entry is posted. 3. Compute bad debt expense. 4. Prepare the adjusting entry to record bad debt expense.
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