Question
In: Accounting
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
contingency?
2. What is the bad debt expense that Manda Panda
should report in its 2018 income statement?
3. Prepare the appropriate journal entry to record
the contingency.
4. Complete the table below to calculate the net
realizable value Manda Panda should report in its 2018 balance
sheet.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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 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...
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?
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...
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...
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...
Pincus Associates uses the allowance method to account for bad debts. During 2021, its first year...
Pincus Associates uses the allowance method to account for bad debts. During 2021, its first year of operations, Pincus provided a total of $212,000 of services on account. In 2021, the company wrote off uncollectible accounts of $8,500. By the end of 2021, cash collections on accounts recelvable totaled $178,500. Pincus estimates that 5% of the accounts receivable balance at 12/31/2021 will prove uncollectible. Required:1. & 2. What journal entry did Pincus record to write off uncollectible accounts during 2021 and...
Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is...
Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2021, net credit sales totaled $5,400,000, and the estimated bad debt percentage is 1.50%. No previously written-off accounts receivable were reinstated during 2021. The allowance for uncollectible accounts had a credit balance of $51,000 at the beginning of 2021 and $44,500, after adjusting entries, at the end of 2021. Required: 1. What is bad debt expense for 2021...
Compare and contrast the direct write-off method and the allowance method for bad debts. At a...
Compare and contrast the direct write-off method and
the allowance method for bad debts.
At a minimum, please consider the following in your
answer:
When is the expense for uncollected accounts receivable
recognized under each method?
Why is the direct write-off method not considered to
follow generally accepted accounting
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