In: Accounting
Execusmart Consultants has provided business consulting services for several years. The company has been using the percentage of credit sales method to estimate bad debts but switched at the end of the first quarter this year to the aging of accounts receivable method. The company entered into the following partial list of transactions.
Number of Days Unpaid | ||||||||||||||||
Customer | Total | 0–30 | 31–60 | 61–90 | Over 90 | |||||||||||
Arrow Ergonomics | $ | 2,200 | $ | 900 | $ | 800 | $ | 500 | ||||||||
Asymmetry Architecture | 3,000 | $ | 3,000 | |||||||||||||
Others (not shown to save space) | 97,100 | 37,100 | 49,000 | 6,000 | 5,000 | |||||||||||
Weight Whittlers | 3,000 | 3,000 | ||||||||||||||
Total Accounts Receivable | $ | 105,300 | $ | 41,000 | $ | 49,800 | $ | 6,500 | $ | 8,000 | ||||||
Estimated Uncollectible (%) | 4 | % | 10 | % | 20 | % | 40 | % | ||||||||
Required:
For items (a)–(j), analyze the amount and direction (+ or –) of effects on specific financial statement accounts and the overall accounting equation. TIP: In item (j), you must first calculate the desired ending balance before adjusting the Allowance for Doubtful Accounts. (Do not round intermediate calculations. Enter any decreases to Assets, Liabilities, or Stockholders Equity with a minus sign.
1.
For items (a)–(j), analyze the amount and direction (+ or –) of effects on specific financial statement accounts and the overall accounting equation.