Question
In: Accounting
Buffalo Industries uses the allowance method of accounting for bad debts. The company produced the following...
Buffalo Industries uses the allowance method of accounting for bad debts. The company produced the following aging of the accounts receivable at year-end.
1.Calculate the total estimated bad debts based on the information below.
| # of days outstanding | total | 0-30 | 31-60 | 61-90 | 91-120 | over 120 |
| Accounts receivable | $ 422,000 | 259,000 | 82,000 | 44,000 | 24,000 | 13,000 |
| % uncollectible | 1% | 4% | 5% | 8% | 11% | |
| Estimated debt |
2.Prepare the year-end adjusting journal entry to record the bad debts using the aged uncollectible accounts receivable determined above. Assume the unadjusted balance in Allowance for Doubtful Accounts is a $3,900 debit.
3.Of the above accounts, $4,700 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account.
4.The company collects $4,700 subsequently on a specific account that had previously been determined to be uncollectible in part (c). Prepare the journal entries necessary to (1) restore the account and (2) record the cash collection.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
plish Brothers Inc. uses the allowance method of accounting for bad debts. The company produced the...
plish Brothers Inc. uses the allowance method of accounting for
bad debts. The company produced the following aging of the accounts
receivable at year-end.
(a)
Calculate the total estimated bad debts based on the information
below.
Number of Days Outstanding
Total
0–30
31–60
61–90
91–120
Over 120
Accounts receivable
$538,000
$374,000
$88,000
$40,000
$24,000
$12,000
% uncollectible
1%
4%
5%
7%
11%
Estimated bad debts
$enter estimated bad debts in dollars
$enter estimated bad debts in dollars
$enter estimated bad...
Splish Brothers Inc. uses the allowance method of accounting for bad debts. The company produced the...
Splish Brothers Inc. uses the allowance method of accounting for
bad debts. The company produced the following aging of the accounts
receivable at year-end.
(a)- ANSWERED- SCROLL TO QUESTION B
Correct answer iconYour answer is correct.
Calculate the total estimated bad debts based on the information
below.
Number of Days Outstanding
Total
0–30
31–60
61–90
91–120
Over 120
Accounts receivable
$538,000
$374,000
$88,000
$40,000
$24,000
$12,000
% uncollectible
1%
4%
5%
7%
11%
Estimated bad debts
$enter estimated bad debts...
Blue Spruce Corp. uses the allowance method of accounting for bad debts. The company produced the...
Blue Spruce Corp. uses the allowance method of accounting for
bad debts. The company produced the following aging of the accounts
receivable at year-end.
Calculate the total estimated bad debts based on the information
below.
Number of Days Outstanding
Total
0–30
31–60
61–90
91–120
Over 120
Accounts receivable
$494,000
$325,000
$91,000
$50,000
$17,000
$11,000
% uncollectible
1%
4%
5%
8%
11%
Estimated bad debts
$enter estimated bad debts in dollars
$enter estimated bad debts in dollars
$enter estimated bad debts...
The Femaware Company uses the allowance method to account for bad debts. At the beginning of...
The Femaware Company uses the allowance method to account for
bad debts. At the beginning of year 1, the allowance account had a
credit balance of $66,844. Credit sales for year 1 totaled
$2,139,000 and the year end accounts receivable balance was
$436,713. During this year, $65,061 in receivables were determined
to be uncollectible. Femaware anticipates that 4% of all credit
sales will ultimately become uncollectible. The fiscal year ends on
December 31.
Required:
1. Does this situation describe a...
The Manda Panda Company uses the allowance method to account for bad debts. At the beginning...
The Manda Panda Company uses the allowance method to account for
bad debts. At the beginning of 2018, the allowance account had a
credit balance of $75,000. Credit sales for 2018 totaled $2,400,000
and the year-end accounts receivable balance was $490,000. During
this year, $73,000 in receivables were determined to be
uncollectible. Manda Panda anticipates that 3% of all credit sales
will ultimately become uncollectible. The fiscal year ends on
December 31.
Required:
1. Does this situation describe a loss...
The Manda Panda Company uses the allowance method to account for bad debts. At the beginning...
The Manda Panda Company uses the allowance method to account for
bad debts. At the beginning of 2018, the allowance account had a
credit balance of $75,000. Credit sales for 2018 totaled $2,400,000
and the year-end accounts receivable balance was $490,000. During
this year, $73,000 in receivables were determined to be
uncollectible. Manda Panda anticipates that 3% of all credit sales
will ultimately become uncollectible. The fiscal year ends on
December 31.
Required:
1. Does this situation describe a loss...
Which companies uses the allowance method for solving bad debts? How does that company estimate bad...
Which companies uses the allowance method for solving bad debts?
How does that company estimate bad debts? Why isn't the direct
write-off method accepted under GAAP?
If a company uses the direct write off method of accounting for bad debts It will...
If a company uses the direct write off method of accounting for
bad debts
It will record bad debt expense only when an account is
determined to be uncollected
It will establish an estimate for the allowance for doubtful
debts
It will reduce the accounts receivable account at the end of
the accounting period for uncollected accounts
When an account is written off, total assets will stay the
same.
None of the above
Cost behaviour refers to:
Manufacturing overheads
Costs...
Describe the two methods of accounting for bad debts under the allowance method (not the direct...
Describe the two methods of accounting for bad debts under the
allowance method (not the direct write off method used on tax
returns). Include how we estimate the allowance needed under one of
the methods and how we account for write offs and recoveries of
write offs.
How is the allowance method of accounting for bad debts different from the direct write off...
How is the allowance method of accounting for bad debts
different from the direct write off method? Which is the preferred
method? Why?
In what ways are accounts receivable similar to a note
receivable? How are they different?
Why might a company choose to issue a note receivable over an
account receivable?
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