Financial Accounting
3rd Edition
ISBN: 9780078025549
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
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Chapter 5, Problem 5.5BE
To determine
Allowance for uncollectible accounts:
Allowance for uncollectible account is a contra asset account, whose normal balance is a credit balance. The amount of allowance for uncollectible account represents the amount of accounts receivable which are not expected to be collected.
Percentage-of-receivables method:
It is a method of estimating the
To record: The
To determine
Allowance for uncollectible accounts:
Allowance for uncollectible account is a contra asset account, whose normal balance is a credit balance. The amount of allowance for uncollectible account represents the amount of accounts receivable which are not expected to be collected.
Percentage-of-receivables method:
It is a method of estimating the bad debts (loss on extending credit), by multiplying the expected percentage of uncollectible based on the total amount of receivables for a specific period. This method is otherwise known as balance sheet method.
To determine: Does the amount of adjustment differ from allowance for uncollectible accounts before adjustment that is credit and allowance for uncollectible accounts before adjustment that is debit.
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Use the following information for the next questions:A trial balance before adjustments included the following:CreditSales₱425,000Sales returns and allowance Accounts receivableAllowance for doubtful accounts₱14,000 53,0007609,000Debit
If the estimate of uncollectibles is made by taking 10% of gross account receivables, the amount of the adjustment is
DI-TWO Corporation had the following accounts
and their balances on December 31 before any
adjustments:
Sales
P5,000,000
Accounts Receivable
600,000
Allowance for doubtful
accounts
25,000
Prepare the Adjusting Journal Entry for the following:
1. Accounts Receivable has a balance of P78,000. It is
estimated that 3% of this will be uncollectible.
2. Accounts Receivable and its corresponding allowance
have balances of P229,000 and P5,000 respectively. It
is estimated that 7.5% of this will be uncollectible.
Chapter 5 Solutions
Financial Accounting
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- How do you adjust this: (Adjusting entry) Allowance for doubtful accounts is ascertained to be 5% of the outstanding accounts receivable, 150000arrow_forwardDI-TWO Corporation had the following accounts and their balances on December 31 before any adjustments: Sales P5,000,000 Accounts Receivable 600,000 Allowance for doubtful accounts 25,000arrow_forwardPatrick Company had the following information in 2021: E (Click the icon to view the information.) If uncollectible accounts are determined by the aging-of-receivables method to be $1,280, the uncollectible account expense for 2021 would be $480. Using the aging-of-receivables method, the balance of the Allowance account after the adjusting entry at year-end 2021 would be - X Data table O A. $800. B. $1,280. Accounts receivable 12/31/21 %24 13,000 OC. $520. OD. $480. Allowance for uncollectible-accounts credit balance 12/31/21 (before adjustment) 800 Credit service revenue during 2021 43,000 Cash service revenue during 2021 13,000 Collections from customers on account during 2021 42,000 Print Donearrow_forward
- After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $610,084 and Allowance for Doubtful Accounts has a balance of $20,670. What is the net realizable value of the accounts receivable? Select the correct answer. $20,670 $610,084 $630,754 $589,414arrow_forwardSarasota Company has a credit balance of $2,200 in Allowance for Doubtful Accounts before adjustment. The estimated uncollectibles under the percentage-of-receivables basis is $5,100. Prepare the adjusting entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Creditarrow_forwardTamarisk, Inc. has accounts receivable of $96,500 at March 31, 2022. Credit terms are 2/10, n/30. At March 31, 2022, there is a $2,244 credit balance in Allowance for Doubtful Accounts prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company's estimates of uncollectibles are as shown below. Balance, March 31 Estimated Percentage Age of Accounts 2022 2021 Uncollectible Current $66,000 $79,900 2 % 1-30 days past due 13,000 7,930 5 31-90 days past due 10,600 2,540 30 Over 90 days past due 6,900 1,060 50 $96,500 $91,430 (a) Determine the total estimated uncollectibles at March 31, 2022. The total estimated uncollectibles $arrow_forward
- 1. What is the required allowance for doubtful accounts at year-end? 2. How much would be the doubtful accounts expense for the current year? Please include solutions with the answers. Thank you.arrow_forwardAn aging-of-accounts-receivable indicates that the amount of uncollectible accounts is $3,910. The Allowance for Uncollectible Accounts prior to adjustment has a debit balance of $600. The Accounts Receivable balance is $44,620. The amount of the adjusting entry for uncollectible accounts should be for: A) $600. B) $3,310. C) $3,910. D) $4,510.arrow_forwardOne company has estimated that $3150 of its accounts receiable will be uncollectible. If allownace for doubtful accounts already has a credit balance of $1102, and the percentage of receivables method is used, it sadjustment to recrod for the period will require a debit to what for what amount?arrow_forward
- Suppose the balance in the Allowance for Doubtful Accounts at the end of year is a $400 Debit balance before adjustment. The company estimates future uncollectible accounts to be $3,200. At what amount would Bad Debt Expense be reported in the current year's income statement? A. $400 B. $2,800 C. $3,600 D. $3,200arrow_forwardOn December 31, 2024, when its Allowance for Doubtful Accounts had a debit balance of $1,403, Blossom Co. estimates that 9% of its accounts receivable balance of $94,500 will become uncollectible and records the necessary adjustment to Allowance for Doubtful Accounts. On May 11, 2025, Blossom Co, determined that B. Jared's account was uncollectible and wrote off $1,179. On June 12, 2025, Jared paid the amount previously written off. Prepare the journal entries on December 31, 2024, May 11, 2025, and June 12, 2025. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date mber 31, 2024 : 1.2025 : Account Titles and Explanation Bad Debt Expense Allowance for Doubtful Accounts Allowance for Doubtful Accounts Accounts Receivabile Debit 10998…arrow_forwardDetermine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case. a. Credit balance of $460 in Allowance for Doubtful Accounts just prior to adjustment. Analysis of Accounts Receivable indicates uncollectible receivables of $7,040. Amount added Ending balance b. Credit balance of $460 in Allowance for Doubtful Accounts just prior to adjustment. Uncollectible receivables are estimated at 3% of credit sales, which totaled $1,009,000 for the year. Amount added Ending balancearrow_forward
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Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License