Financial & Managerial Accounting
13th Edition
ISBN: 9781285866307
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 8, Problem 8.11EX
To determine
Analysis of receivables method:
A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as analysis of receivables method. This method is otherwise known as aging of receivables method. Under analysis of receivables method, estimated
To estimate: The proper balance of the allowance for doubtful accounts as of December 31.
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Estimating doubtful accounts
Outlaw Bike Co. is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December 31 and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:
Age Class
Not past due
1-30 days past due
31-60 days past due
61-90 days past due
91-180 days past due
Over 180 days past due
Balance Percent Uncollectible
$628,000
69,100
31,400
22,600
16,300
11,900
$779,300
Age Class
Not past due
1-30 days past due
31-60 days past due
61-90 days past due
91-180 days past due
Over 180 days past due
Total
Balance
$628,000
69,100
Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31.
Estimated
Estimated
31,400
22,600
16,300
11,900
1/2%
3
$779,300
7
Uncollectible Accounts
7
15
41
Percent
15
70
1/2%
3
41
70
Uncollectible Accounts
Amount
Estimating Doubtful Accounts
Easy Rider International is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December 31, 20Y3, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:
Age Interval
Balance
PercentUncollectible
Not past due
$342,200
1
%
1–30 days past due
127,600
5
31–60 days past due
52,200
25
61–90 days past due
29,000
35
91–180 days past due
29,000
50
Over 180 days past due
19,200
70
$599,200
Estimate what the balance of the allowance for doubtful accounts should be as of December 31, 20Y3. Enter your answers as positive amounts.
Age Interval
EstimatedUncollectibleAmount
Not past due
$
1-30 days past due
31-60 days past due
61-90 days past due
91-180 days past due
Over 180 days past due
Total
$
Estimating Doubtful Accounts
Outlaw Bike Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows:
Age Class
Balance
Percent Uncollectible
Not past due
$532,000
1/2
%
1–30 days past due
58,500
4
31-60 days past due
26,600
6
61–90 days past due
19,200
14
91–180 days past due
13,800
41
Over 180 days past due
10,100
80
$660,200
Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31.
Age Class
Balance
PercentUncollectible
Estimated UncollectibleAccounts Amount
Not past due
$532,000
1/2%
$fill in the blank 1
1-30 days past due
58,500
4
fill in the blank 2
31-60 days past due
26,600
6
fill in the blank 3
61-90 days past due
19,200
14
fill in the blank 4
91-180 days past due
13,800
41
fill in the blank 5
Over 180…
Chapter 8 Solutions
Financial & Managerial Accounting
Ch. 8 - What are the three classifications of receivables?Ch. 8 - Dans Hardware is a small hardware store in the...Ch. 8 - What kind of an account (asset, liability, etc.)...Ch. 8 - After the accounts are adjusted and closed at the...Ch. 8 - A firm has consistently adjusted its allowance...Ch. 8 - Which of the two methods of estimating...Ch. 8 - Neptune Company issued a note receivable to...Ch. 8 - Prob. 8DQCh. 8 - The maker of a 240,000, 6%, 90-day note receivable...Ch. 8 - The note receivable dishonored in Discussion...
Ch. 8 - Prob. 8.1APECh. 8 - Prob. 8.1BPECh. 8 - Prob. 8.2APECh. 8 - Prob. 8.2BPECh. 8 - Prob. 8.3APECh. 8 - Prob. 8.3BPECh. 8 - Analysis of receivables method At the end of the...Ch. 8 - Prob. 8.4BPECh. 8 - Prob. 8.5APECh. 8 - Note receivable Prefix Supply Company received a...Ch. 8 - Prob. 8.6APECh. 8 - Prob. 8.6BPECh. 8 - Classifications of receivables Boeing is one of...Ch. 8 - Prob. 8.2EXCh. 8 - Entries for uncollectible accounts, using direct...Ch. 8 - Prob. 8.4EXCh. 8 - Prob. 8.5EXCh. 8 - Prob. 8.6EXCh. 8 - Number of days past due Toot Auto Supply...Ch. 8 - Aging of receivables schedule The accounts...Ch. 8 - Estimating allowance for doubtful accounts Waddell...Ch. 8 - Prob. 8.10EXCh. 8 - Prob. 8.11EXCh. 8 - Prob. 8.12EXCh. 8 - Entries for bad debt expense under the direct...Ch. 8 - Entries for bad debt expense under the direct...Ch. 8 - Prob. 8.15EXCh. 8 - Effect of doubtful accounts on net income Using...Ch. 8 - Prob. 8.17EXCh. 8 - Prob. 8.18EXCh. 8 - Prob. 8.19EXCh. 8 - Prob. 8.20EXCh. 8 - Entries for notes receivable The series of seven...Ch. 8 - Prob. 8.22EXCh. 8 - Entries for receipt and dishonor of note...Ch. 8 - Prob. 8.24EXCh. 8 - Prob. 8.25EXCh. 8 - Accounts receivable turnover and days' sales in...Ch. 8 - Prob. 8.27EXCh. 8 - Accounts receivable turnover and days' sales in...Ch. 8 - Prob. 8.29EXCh. 8 - Allowance method entries The following...Ch. 8 - Aging of receivables; estimating allowance for...Ch. 8 - Compare two methods of accounting for...Ch. 8 - Prob. 8.4APRCh. 8 - Notes receivable entries The following data relate...Ch. 8 - Sales and notes receivable transactions The...Ch. 8 - Allowance method entries The following...Ch. 8 - Prob. 8.2BPRCh. 8 - Compare two methods of accounting for...Ch. 8 - Prob. 8.4BPRCh. 8 - Notes receivable entries The following data relate...Ch. 8 - Sales and notes receivable transactions The...Ch. 8 - Ethics and professional conduct in, business Bev...Ch. 8 - Prob. 8.2CPCh. 8 - Prob. 8.3CPCh. 8 - Prob. 8.4CPCh. 8 - Prob. 8.5CP
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- Bad Debt Expense: Aging Method Glencoe Supply had the following accounts receivable aging schedule at the end of a recent year. The balance in Glencoes allowance for doubtful accounts at the beginning of the year was $58,620 (credit). During the year, accounts in the total amount of $62,400 were written off. Required: 1. Determine bad debt expense. 2. Prepare the journal entry to record bad debt expense. 3. If Glencoe had written off $90,000 of receivables as uncollectible during the year, how much would bad debt expense reported on the income statement have changed?arrow_forwardDetermining 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.arrow_forwardAllowance Method of Accounting for Bad Debts—Comparison of the Two Approaches Kandel Company had the following data available for 2016 (before making any adjustments): Required Prepare the journal entry to recognize bad debts under the following assumptions: (a) bad debts expense is expected to be 2% of net credit sales for the year and (b) Kandel expects it will not be able to collect 6% of the balance in accounts receivable at year-end. Assume instead that the balance in the allowance account is a $2,600 debit. How will this affect your answers to part (1)?arrow_forward
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