Question
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Arundel Company uses percentage of sales to estimate uncollectibles. At the end of the fiscal year, December...
Arundel Company uses percentage of sales to estimate uncollectibles. At the end of the fiscal year, December 31, 2018, Accounts Receivable has a balance of $78,000 and had a total of $810,000 in credit sales. Arundel assumes that 2.0% of sales will eventually be uncollectible. before adjustment, the Allowance for Uncollectible Accounts had a credit balance of 6,000. What dollar amount should be credited to Allowance for Uncollectible Accounts at year end?
Solutions
Expert Solution
So, amount to be credited to Allowance accounts is $10,600.
Here the required provision is $16,200 (that is 5% of sales) and the accounts receivable balance is $78,000. Which means required provision is less than total accounts receivable. So, the provision should be created for entire $16,200.
If required provision is less than accounts receivable then provision equla to value of accounts receivable is only required.
Hope you understood the solution. If you have any doubt please leave your doubt in the comment section so that I can clarify your doubt.
Thank you.
ekkarill92 answered 2 years agoRelated Solutions
Arundel Company uses percentage of sales to estimate uncollectibles. At the end of the fiscal year, December...
Arundel Company uses percentage of
sales to estimate uncollectibles. At the end of the
fiscal year, December 31, 2018, Accounts Receivable has a balance
of $78,000 and had a total of $875,000 in credit sales. Arundel
assumes that 1.5% of sales will eventually be uncollectible. before
adjustment, the Allowance for Uncollectible Accounts had a credit
balance of 4,500. What dollar amount should be credited to
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Estimated Collectible
$290,000
< 30 days old
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60,000
30 to 60 days old
90.5%
25,000
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70.5%
14,000
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The current unadjusted Allowance for Uncollectible
Accounts balance is a debit balance of $2,000 and the Bad Debt
Expense accounts has an unadjusted...
Arundel Company uses aging to estimate uncollectibles. At the end of the fiscal year, December 31, 2018,...
Arundel Company uses aging to estimate
uncollectibles. At the end of the fiscal year, December
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Estimated Collectible
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61 to 120 days old
71.5%
6,000
> 120 days old
19.0%
The current unadjusted Allowance for Uncollectible
Accounts balance is a debit balance of $2,000 and the Bad Debt
Expense accounts has an unadjusted...
Arundel Company uses aging to estimate uncollectibles. At the end of the fiscal year, December 31, 2018,...
Arundel Company uses aging to estimate
uncollectibles. At the end of the fiscal year, December
31, 2018, Accounts Receivable has a balance that consists
of:
Dollar Value
Age of Account
Estimated Collectible
$235,000
< 30 days old
98.0%
60,000
30 to 60 days old
95.0%
25,000
61 to 120 days old
77.0%
6,000
> 120 days old
17.0%
The current unadjusted Allowance for Uncollectible
Accounts balance is a debit balance of $2,000 and the Bad Debt
Expense accounts has an unadjusted...
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Baltimore
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a balance that consists of:
Dollar
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Age of
Account
Estimated
Collectible
$140,000
< 30 days
old
98%
60,000
30 to 60 days
old
88%
30,000
61 to 120 days
old
70%
11,000
> 120 days
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10%
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Williams Corporation uses the balance sheet approach in estimating uncollectibles. At the end of the year,...
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A.
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B.
$22,000
C.
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D.
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Question 3
A. J & B Company uses the percentage of sales approach to
estimate its uncollectible accounts. The company’s annual sales for
its first financial year of operations ending July 31, 2020 was
$500,000, cash sales contributed to 2% of the overall sales and the
accounts receivable balance at year end was $75,000. Based on
industry expectations, it estimated that 3% of its credit sales
would be uncollectible.
Required:
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A. J & B Company uses the percentage of sales approach to estimate its uncollectible accounts....
A. J & B Company uses the percentage of sales approach to
estimate its uncollectible accounts. The company’s annual sales for
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$500,000, cash sales contributed to 2% of the overall sales and the
accounts receivable balance at year end was $75,000. Based on
industry expectations, it estimated that 3% of its credit sales
would be uncollectible.
Required: Show all workings
a. Calculate the bad debt expense at July 31,...
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At the end of the current year, the accounts receivable account
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