Financial Accounting
4th Edition
ISBN: 9781259307959
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
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Chapter 5, Problem 5.9BE
To determine
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 compute: The total estimated uncollectible accounts.
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Spade Agency separates its accounts receivable into three age groups for purposes of estimating the percentage of uncollectible accounts. 1. Accounts not yet due = $25,000; estimated uncollectible = 4%. 2. Accounts 1–60 days past due = $10,000; estimated uncollectible = 25%. 3. Accounts more than 60 days past due = $5,000; estimated uncollectible = 50%. In addition, the balance of Allowance for Uncollectible Accounts before adjustment is $1,000 (credit). Compute the total estimated uncollectible accounts and record the year-end adjustment.
Zuo Software categorizes its accounts receivable into four age groups for purposes of estimating its allowance for uncollectible accounts.1. Accounts not yet due = $400,000; estimated uncollectible = 8%.2. Accounts 1–30 days past due = $50,000; estimated uncollectible = 15%.3. Accounts 31–90 days past due = $40,000; estimated uncollectible = 30%4. Accounts more than 90 days past due = $30,000; estimated uncollectible = 50%.At 12/31/2021, before recording any adjustments, Zuo has a credit balance of $22,000 in its allowance for uncollectible accounts.
Required:1. Estimate the appropriate 12/31/2021 balance for Zuo’s allowance for uncollectible accounts.2. What journal entry should Zuo record to adjust its allowance for uncollectible accounts?3. Calculate Zuo’s 12/31/2021 net accounts receivable balance.
Dhaliwal Digital categorizes its accounts receivable into three age groups for purposes of estimating its allowance for uncollectible accounts.1. Accounts not yet due = $180,000; estimated uncollectible = 10%.2. Accounts 1–45 days past due = $25,000; estimated uncollectible = 20%.3. Accounts more than 45 days past due = $10,000; estimated uncollectible = 30%.Before recording any adjustments, Dhaliwal has a debit balance of $45,000 in its allowance for uncollectible accounts.Required:1. Estimate the appropriate 12/31/2021 balance for Dhaliwal’s allowance for uncollectible accounts.2. What journal entry should Dhaliwal record to adjust its allowance for uncollectible accounts?
Chapter 5 Solutions
Financial Accounting
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- Bristax Corporation recorded $1,385,660 in credit sales for the year, and $732,410 in accounts receivable. The uncollectible percentage is 3.1% for the income statement method and 4.5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $20,550; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $17,430; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.arrow_forwardJars Plus recorded $861,430 in credit sales for the year and $488,000 in accounts receivable. The uncollectible percentage is 2.3% for the income statement method, and 3.6% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $10,220, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $5,470, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.arrow_forwardInk Records recorded $2,333,898 in credit sales for the year and $1,466,990 in accounts receivable. The uncollectible percentage is 3% for the income statement method and 5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $20,254; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.arrow_forward
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