Concept explainers
Requirement 1:
Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. Estimated future uncollectible accounts receivable are known as bad debt expense.
Aging of receivables method:
A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method.
To Determine: The amount of uncollectible receivables of Hospital M.
Requirement 2:
Bad debt expense:
Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. Estimated future uncollectible accounts receivable are known as bad debt expense.
Aging of receivables method:
A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as aging of receivables method.
To Determine: The adjustment for uncollectible accounts on December 31, 2018 of Hospital M.
Requirement 3:
Net realizable value:
Net realizable value is the net amount of receivables which a business expects to collect from its debtors. Net realizable value is the excess amount of accounts receivable over the allowance for uncollectible accounts.
To Calculate: The net realizable value of accounts receivable on December 31, 2018 of Hospital M.
Want to see the full answer?
Check out a sample textbook solutionChapter 5 Solutions
Financial Accounting
- Prior to adjustments, Barrett Companys account balances at December 31, 2019, for Accounts Receivable and the related Allowance for Doubtful Accounts were 1,200,000 and 60,000, respectively. An aging of accounts receivable indicated that 106,000 of the December 31, 2019, receivables may be uncollectible. The net realizable value of accounts receivable at December 31, 2019, was: a. 1,034,000 b. 1,094,000 c. 1,140,000 d. 1,154,000arrow_forwardPhysicians’ Hospital has the following balances on December 31, 2021, before any adjustment: Accounts Receivable = $60,000; Allowance for Uncollectible Accounts = $1,100 (credit). On December 31, 2021, Physicians’ estimates uncollectible accounts to be 15% of accounts receivable.Required:1. Record the adjustment for uncollectible accounts on December 31, 2021.2. Determine the amount at which bad debt expense is reported in the income statement and the allowance for uncollectible accounts is reported in the balance sheet.3. Calculate net accounts receivable.arrow_forwardThe Physical Therapy Center specializes in helping patients regain motor skills after serious accidents. The center has the following balances on December 31, 2021, before any adjustment: Accounts Receivable = $110,000; Allowance for Uncollectible Accounts = $4,000 (debit). The center estimates uncollectible accounts based on an aging of accounts receivable as shown below. Age Group AmountReceivable Estimated PercentUncollectible Not yet due $ 60,000 4% 0 – 60 days past due 26,000 20% 61–120 days past due 16,000 30% More than 120 days past due 8,000 85% Total $110,000 Required: 1. Estimate the amount of uncollectible receivables. 2. Record the adjustment for uncollectible accounts on December 31, 2021. 3. Calculate net accounts receivable.arrow_forward
- 1) Accounting for uncollectible accounts using the allowance method (aging-of-receivables) and reporting receivables on the balance sheet At September 30, 2018, the accounts of Roxbury Medical Center (RMC) include the following: Accounts Receivable $154,000 Allowance for Bad Debts (credit balance) 3,700 During the last quarter of 2018, RMC completed the following selected transactions: Sales on account, $465,000. Ignore Cost of Goods Sold. Collections on account, $441,800. Wrote off accounts receivable as uncollectible: Jenkins, Co., $1,900; Sony, $800; and Smith, Inc., $500 Recorded bad debts expense based on the aging of accounts receivable, as follows: Age of Accounts 1–30 Days 31–60 Days 61–90 Days Over 90 Days Accounts Receivable $ 97,000 $ 37,000 $ 17,000 $ 14,000 Estimated percent uncollectible 0.2% 3.5% 29% 32% Page Break Requirements 1.Open T-accounts for Accounts Receivable…arrow_forward1. Couldn't understand this question, show steps thanks. Ally Company uses the aging method to adjust the allowance for uncollectible accounts at the end of the period. At December 31, 2019, the balance of accounts receivable is $210,000 and the allowance for uncollectible accounts has a credit balance of $3,000 (before adjustment). An analysis of accounts receivable produced the following age groups: Based on past experience, Ally estimates that the percentages of accounts that will prove to be uncollectible within the three groups are 2%, 8%, and 20%, respectively. Based on these facts, the adjusting entry for bad debt expense should be made in the amount of: A. $6,000 B. $9,000 C. $3,000 D. $13,000arrow_forwardAccounting for uncollectible accounts using the allowance method (aging-of-receivables) and reporting receivables on the balance sheet. At September 30, 2018, the accounts of Roxbury Medical Center (RMC) include the following: Accounts Receivable $154,000 Allowance for Bad Debts (credit balance) 3,700 During the last quarter of 2018, RMC completed the following selected transactions: • Sales on account, $465,000. Ignore Cost of Goods Sold. • Collections on account, $441,800. • Wrote off accounts receivable as uncollectible: Jenkins, Co., $1,900; Sony, $800; and Smith, Inc., $500 • Recorded bad debts expense based on the aging of accounts receivable, as follows: Age of Accounts 1–30 Days 31–60 Days 61–90 Days Over 90 Days Accounts Receivable $ 97,000 $ 37,000 $ 17,000 $ 14,000 Estimated percent uncollectible 0.2% 3.5% 29% 32% Requirements Open T-accounts for Accounts Receivable and Allowance for…arrow_forward
- Supreme Carpet Care estimates the amount of uncollectible accounts using the percentage of receivables method. After aging the accounts, it is estimated that $7,225 will not be collected. Required: Give the end-of-period adjusting entry at December 31 in general journal form to enter the estimate for bad debt expense assuming the Allowance for Doubtful Accounts account has a debit balance of $420 before adjustmenarrow_forwardHow much cash did the Hospital collect on Accounts Receivable in 20X1? $15800 $16000 $13000 $12800arrow_forwardSprague Company uses the aging method to adjust the allowance for uncollectibleaccounts at the end of the period. At December 31, 2018, the balance of accounts receivable is$250,000 and the allowance for uncollectible accounts has a credit balance of $4,000 (beforeadjustment). An analysis of accounts receivable produced the following age groups:Current ...................................... $150,00060 days past due......................... 90,000Over 60 days past due................ 10,000$250,000Based on past experience, Sprague estimates that the percentage of accounts that will prove tobe uncollectible within the three age groups is 2% of the current balance, 8% of the 60 dayspast due balance, and 18% of the over 60 days past due balance. Based on these facts, theadjusting entry for uncollectible accounts should be made in the amount ofa. $8,000.b. $12,000.c. $17,000.d. $16,000.arrow_forward
- Southwest Pediatrics has the following balances on December 31, 2021, before any adjustment: Accounts Receivable = $130,000; Allowance for Uncollectible Accounts = $2,100 (debit). On December 31, 2021, Southwest estimates uncollectible accounts to be 20% of accounts receivable.Required:1. Record the adjustment for uncollectible accounts on December 31, 2021.2. Determine the amount at which bad debt expense is reported in the income statement and the allowance for uncollectible accounts is reported in the balance sheet.3. Calculate net accounts receivable.arrow_forwardSEALIFE Company uses the percentage of receivable method in estimating uncollectible accounts receivable. The aging analysis of accounts receivable at 31 December 2019 follows: Age Group Total Percentage uncollectible Not yet due $52,000 1% 1-30 days past due $30,000 2% 31-60 days past due $13,000 ?% If SEALIFE's Allowance for Doubtful Accounts at 31 December 2019 was $2,160, the percentage estimated uncollectible for receivables that are past due for 31 - 61 days is: A: 4% B: 5% C: 6% D: 8%arrow_forwardAllowance for Doubtful Accounts has a credit balance of $667 at the end of the year (before adjustment), and an analysis of accounts in the customer ledger indicates the estimated amount of uncollectible accounts should be $17,457. Based on this estimate, which of the following adjusting entries should be made? Select the correct answer. debit Bad Debt Expense, $16,790; credit Allowance for Doubtful Accounts, $16,790 debit Allowance for Doubtful Accounts, $667; credit Bad Debt Expense, $667 debit Allowance for Doubtful Accounts, $18,124; credit Bad Debt Expense, $18,124 debit Bad Debt Expense, $667; credit Allowance for Doubtful Accounts, $667arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage