Financial Accounting, Student Value Edition (12th Edition)
12th Edition
ISBN: 9780134727066
Author: C. William Thomas, Wendy M. Tietz, Walter T. Harrison Jr.
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Textbook Question
Chapter 5, Problem 5.33BE
LO 5
(Learning Objective 5: Apply GAAP to uncollectible accounts) Aspen Foods, Inc., experienced the following revenue and
Suppose Aspen estimates that 4% of (gross) revenues will become uncollectible. Assume all revenues are on credit.
Requirement
1. Journalize service revenue (all on account), uncollectible-accounts expense, and write-offs during March. Include explanations.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
(Learning Objectives 1, 4, 5, 6: Apply GAAP for revenue, receivables,collections, and uncollectibles using the percent-of-sales method; account for notesreceivable) Hopewell Shipping Corporation is an overnight shipper. Since it sells on credit, thecompany cannot expect to collect 100% of its accounts receivable. At October 31, 2018, and2019, respectively, Hopewell reported the following on its balance sheet (in millions of dollars):October 31,2019 2018Accounts receivable.................................................. $4,200 $4,000Less: Allowance for uncollectible accounts...............Accounts receivable, net........................................... $4,030 $3,840(170) (160)During the year ended October 31, 2019, Hopewell earned service revenue and collected cashfrom customers. Assume uncollectible-account expense for the year was 5% of service revenueon account and Hopewell wrote off uncollectible receivables and made other adjustments as necessary (see below). At year-end,…
Activity 2
Directions: Compute the uncollectible account expense using the percent of accounts
receivable method.
The following information needed in the computation of uncollectible accounts expense
for March 2021 is available for Parkland Enterprises:
Sales
Cash Sales
Accounts Receivable-ending
200,000.00
50,000.00
5,000.00
Assume that the company decided that five percent (5%) of accounts receivable are
deemed uncollectible.
(Learning Objectives 1, 2: Apply GAAP for proper revenue recognition; accountfor sales allowances) Niagara Jewelry sells to retailers who then resell the products. Niagaradoes not offer sales discounts for early payment; it asks that customers pay in full within15 days or at the point of sale with a credit card. The company had the following selectedtransactions during July:July 2 Sold $150,000 of merchandise to Lakeside Jewels on account.Sold $12,000 of merchandise to Superior Crystals, which paid by credit card. Thecredit card company charges Niagara a fee of 2% on credit card sales.July 17Shining Stones noticed that some of the merchandise received was damaged, so itreturned $17,000 worth of merchandise to Niagara.July 30July 3July 16July 19Shining Stones paid the balance of what it owed for the purchase on July 17.Lakeside Jewels paid the balance of what it owed for the purchase on July 2.Sold $185,000 of merchandise to Shining Stones on account.Requirements1. Journalize Niagara’s…
Chapter 5 Solutions
Financial Accounting, Student Value Edition (12th Edition)
Ch. 5 - A doctor for the Benson Family Practice performs a...Ch. 5 - On March 15, Maxwell Plush sold and shipped...Ch. 5 - Prob. 3QCCh. 5 - What is the financial impact on a company when a...Ch. 5 - Prob. 5QCCh. 5 - Which of the following statements is true? a....Ch. 5 - Duncan Corporation began 2018 with a balance in...Ch. 5 - Use the following information to answer questions...Ch. 5 - Jackson Company had the following information in...Ch. 5 - If uncollectible accounts are determined by the...
Ch. 5 - Refer to Question 10. Using the...Ch. 5 - Refer to Question 10. Using the...Ch. 5 - Accounts Receivable has a debit balance of 2,500,...Ch. 5 - Swan Corporation received a four-month, 8%, 1,650...Ch. 5 - What is the maturity value of a 30,000, 12%,...Ch. 5 - If the adjusting entry to accrue interest on a...Ch. 5 - Net credit sales total 1,264,800. Beginning and...Ch. 5 - From the following list of accounts, calculate the...Ch. 5 - Prob. 5.1ECCh. 5 - LO 1 (Learning Objective 1: Apply GAAP for proper...Ch. 5 - LO 1 (Learning Objective 1: Record a credit card...Ch. 5 - LO 1, 2 (Learning Objectives 1, 2: Apply GAAP for...Ch. 5 - Prob. 5.4SCh. 5 - (Learning Objective 3: Account for sales...Ch. 5 - (Learning Objective 4: Account for accounts...Ch. 5 - LO 5 (Learning Objective 5: Evaluate...Ch. 5 - LO 5 (Learning Objective 5: Evaluate...Ch. 5 - LO 6 (Learning Objective 6: Account for notes...Ch. 5 - LO 6 (Learning Objective 6: Account for notes...Ch. 5 - Prob. 5.11SCh. 5 - LO 7 (Learning Objective 7: Evaluate liquidity...Ch. 5 - LO 1, 2 (Learning Objectives 1, 2: Apply GAAP for...Ch. 5 - Prob. 5.14AECh. 5 - Prob. 5.15AECh. 5 - LO 1, 2, 3 (Learning Objectives 1, 2, 3: Apply...Ch. 5 - LO 4, 5 (Learning Objectives 4, 5; Account for...Ch. 5 - LO 5 (Learning Objective 5: Apply GAAP for...Ch. 5 - LO 4, 5 (Learning Objectives 4, 5: Account for...Ch. 5 - LO 5 (Learning Objective 5: Apply GAAP to...Ch. 5 - LO 5 (Learning Objective 5: Apply GAAP to...Ch. 5 - LO 6 (Learning Objective 6: Apply GAAP for notes...Ch. 5 - Prob. 5.23AECh. 5 - Prob. 5.24AECh. 5 - Prob. 5.25BECh. 5 - Prob. 5.26BECh. 5 - Prob. 5.27BECh. 5 - LO 1, 2, 3 (Learning Objectives 1, 2, 3: Apply...Ch. 5 - LO 4, 5 (Learning Objectives 4, 5: Account for...Ch. 5 - LO 5 (Learning Objective 5: Apply GAAP for...Ch. 5 - LO 4, 5 (Learning Objectives 4, 5: Account for...Ch. 5 - LO 5 (Learning Objective 5: Apply GAAP to...Ch. 5 - LO 5 (Learning Objective 5: Apply GAAP to...Ch. 5 - LO 6 (Learning Objective 6: Apply GAAP for notes...Ch. 5 - Prob. 5.35BECh. 5 - Prob. 5.36BECh. 5 - Fairmont Company has shipped goods to Willowbook...Ch. 5 - Prob. 5.38QCh. 5 - Prob. 5.39QCh. 5 - On April 3, a customer returned 600 of merchandise...Ch. 5 - Maple Grove Legal Association performs legal...Ch. 5 - Under the allowance method for uncollectible...Ch. 5 - Prob. 5.43QCh. 5 - Refer to Q5-43. The net receivables on the balance...Ch. 5 - Prob. 5.45QCh. 5 - Prob. 5.46QCh. 5 - Prob. 5.47QCh. 5 - Questions 5-48 through 5-51 use the following...Ch. 5 - Prob. 5.49QCh. 5 - Prob. 5.50QCh. 5 - Prob. 5.51QCh. 5 - Prob. 5.52QCh. 5 - A company with net credit sales of 960,000,...Ch. 5 - A company sells on credit terms of 2/10, n/30 and...Ch. 5 - (Learning Objectives 1, 2: Apply GAAP for proper...Ch. 5 - (Learning Objectives 1, 3: Apply GAAP for proper...Ch. 5 - (Learning Objectives 1, 4, 5, 6: Apply GAAP for...Ch. 5 - (Learning Objective 5: Apply GAAP for...Ch. 5 - (Learning Objectives 5, 7: Apply GAAP for...Ch. 5 - (Learning Objective 6: Apply GAAP for notes...Ch. 5 - Prob. 5.61APCh. 5 - (Learning Objectives 1, 2, 3, 4, 5: Apply GAAP for...Ch. 5 - (Learning Objectives 1, 2: Apply GAAP for proper...Ch. 5 - Prob. 5.64BPCh. 5 - Prob. 5.65BPCh. 5 - (Learning Objective 5: Apply GAAP for...Ch. 5 - Prob. 5.67BPCh. 5 - Prob. 5.68BPCh. 5 - (Learning Objectives 1, 7: Show how to speed up...Ch. 5 - (Learning Objectives 1, 2, 3, 4, 5: Apply GAAP for...Ch. 5 - Prob. 5.71CEPCh. 5 - Prob. 5.72CEPCh. 5 - Prob. 5.73CEPCh. 5 - Prob. 5.74SCCh. 5 - Prob. 5.75DCCh. 5 - Prob. 5.76DCCh. 5 - Strasburg Loan Company is in the consumer loan...Ch. 5 - Prob. 1FFCh. 5 - Focus on Analysis Under Armour, Inc. LO 1, 4, 7...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- A company has the following account balances at the end of the year:• Credit Sales = $400,000• Accounts receivable = $80,000• Allowance for Uncollectible Accounts = $400 credit The company estimates 1% of credit sales will be uncollectible. At what amount would Allowance for Uncollectible Accounts be reported in the current year’s balance sheet? a. $4,000.b. $4,400. c. $3,600. d. $800.arrow_forwardProblem 4-9 (AICPA Adapted) Jinx Company provided the following information for the current year in relation to accounts receivable: Accounts receivable, January 1 Credit sales Sales return Accounts written off Collections from customers Estimated future sales return on December 31 Estimated uncollectible accounts per aging at year-end 1,300,000 5,500,000 150,000 100,000 5,000,000 50,000 250,000 What amount should be reported as net realizable value of accounts receivable on December 31? a. 1,550,000 b. 1,250,000 c. 1,300,000 d. 1,500,000arrow_forward(Learning Objectives 1, 3: Apply GAAP for proper revenue recognition; accountfor sales discounts) At Uptown Arts, gross sales for the month included:Sales on account (2/10, n/30) $350,000Credit card sales (2% credit card fee) $250,000Half of the sales on account were paid within the discount period; the other accounts were paidin full by the end of the month.Requirements1. Journalize the sales on account, the credit card sales, and the cash payments on accountreceived during the month.2. Calculate the net sales revenue for the month.arrow_forward
- A company is getting ready to publish their annual financial statements. They have the following beginning balances: Beginning balance for gross accounts receivable (A) $2,000 beginning balance for Allowance for doubtful accounts (XA) $300 1.) They make $10,000 in credit sales in the current period. Assume that 1% of credit sales are typically not collectible. If the income statement method is used, -Ending balance for the allowance for doubtful accounts= $1,300 -Bad debt expense=$1,000 2.) assume that no cash collections were made during the accounting period and continue to assume that the $10,000 In credit sales were made in the current period. Suppose that 5% of accounts receivable are typically not collectible. If the balance sheet method is used, Bad debt expense= $300 Ending balance for the allowance for doubtful accounts= $600 QUESTION: From your analysis in question 1 and 2, which method will result in a higher net income? Why?arrow_forwardA. Assume that all sales are on account. If sales revenue was $18,000,000 and the average days in accounts receivable was 38 days for the last operating year, what would the average accounts receivable balance have been? a. $1,680,000 b. $1,500,000 c. $1,875,000 d. $18,000,000 B. If accounts receivable is projected to be $800,000 at the beginning of the next operating year and $1,100,000 at the end of the next operating year: would cash be generated by accounts receivable or needed to fund accounts receivable? And, by how much? a. $300,000 of cash needed to fund accounts receivable b. $1,100,000 of cash needed to fund accounts receivable c. $500,000 of cash needed to fund accounts receivable d. $300,000 of cash generated by accounts receivablearrow_forward(Learning Objectives 1, 3: Apply GAAP for proper revenue recognition; accountfor sales discounts) At Hometown Arts, gross sales for the month included:Sales on account (2/10, n/30) $150,000Credit card sales (3% credit card fee) $200,000Half of the sales on account were paid within the discount period; the other accounts were paidin full by the end of the month.Requirements1. Journalize the sales on account, the credit card sales, and the cash payments on accountreceived during the month.2. Calculate the net sales revenue for the montharrow_forward
- A company has the following account balances at the end of the year:• Credit Sales = $400,000• Accounts receivable = $80,000• Allowance for Uncollectible Accounts = $400 creditThe company estimates future uncollectible accounts to be 4% of accounts receivable. At what amount would Bad Debt Expense be reported in the current year’s income statement? a. $400.b. $2,800.c. $3,200.d. $3,600.arrow_forwardWeygandt, Accounting Principles, 13th Edition, Custom WileyPLUS Course for Bronx Community College Help I System Announcements CALCULATOR PRINTER VERSION 4 ВАСК NEX Exercise 9-04 a-f (Part Level Submission) At the beginning of the current period, Cheyenne had balances in Accounts Receivable of $286,000 and in Allowance for Doubtful Accounts of $9,900 (credit). During the period, had net credit sales of $890,000 and collections of $845,500. It wrote off as uncollectible accounts receivable of $6,000. However, a $4,000 account previously written off as uncollectible was recovered before the end of the current period. Uncollectible accounts are estimated to total $24,800 at the end of the period. (Omit cost of goods sold entries. (a - d) (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…arrow_forwardA company is getting ready to publish their annual financial statements. They have the following beginning balances: Beginning balance for gross accounts receivable (A) $2,000 beginning balance for Allowance for doubtful accounts (XA) $300 question: now supposed that the company recorded $50 in write-offs for the current accounting period. if the company makes $10,000 in credit sales in the current period. Assume that 1% of credit sales are typically not collectible, using the income statement method, what is the bad expense now? please show work so I can understand the problemarrow_forward
- E5-18A. (Learning Objective 5: Apply GAAP for uncollectible receivables) At December 31,2018, Waco Travel Agency has an Accounts Receivable balance of $93,000. Allowance forUncollectible Accounts has a credit balance of $870 before the year-end adjustment. Servicerevenue (all on account) for 2018 was $800,000. Waco estimates that its uncollectible-accountexpense for the year is 1% of service revenue. Make the year-end entry to record uncollectibleaccount expense. Show how Accounts Receivable and Allowance for Uncollectible Accountsare reported on the balance sheet at December 31, 2018.arrow_forward(Learning Objectives 4, 5: Account for accounts receivable and uncollectibleaccounts) Perform the following accounting for the receivables of Hawkins and Harris, a CPAfirm, at December 31, 2018.Requirements1. Set up T-accounts and start with the beginning balances for these T-accounts:■ Accounts Receivable, $104,000■ Allowance for Uncollectible Accounts, $12,000Post the following 2018 transactions to the T-accounts:a. Service revenue of $695,000, all on accountb. Collections on account, $720,000c. Write-offs of uncollectible accounts, $8,000d. Uncollectible-account expense (allowance method), $15,0002. What are the ending balances of Accounts Receivable and Allowance for UncollectibleAccounts?3. Show how Hawkins and Harris will report accounts receivable on its balance sheet atDecember 31, 2018.arrow_forward2. Given the following information about a credit card account, determine the average daily balance for the period, then determine the finance charge if the interest is 1.5% of the average daily balance, and then find the new balance at the end of the period. Previous Balance - $228.95 January 27 - Billing Date February 9 - Charge - $11.08 February 13 - Returns - $26.54 February 20 - Payment - $29 February 25 - Charge - $71.19 3. Find the annual percentage rate using the annual percentage rate table for the following. Amount Financed: $4500 Finance Charge: $1220 No. of Monthly Payments: 48 4. James buys a used car costing $12,800 with a $500 down payment and loan payments of $399 a month for 36 months. Determine the amount financed, the total installment cost, the total interest paid, and the APR on the loan.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License