Question

In: Accounting

Crane Company uses the percentage-of-receivables basis to record bad debt expense. Accounts receivable (ending balance) $550,000...

Crane Company uses the percentage-of-receivables basis to record bad debt expense.

Accounts receivable (ending balance) $550,000 (debit)
Allowance for doubtful accounts (unadjusted) 5,300 (debit)


The company estimates that 2% of accounts receivable will become uncollectible.

(a)

Prepare the adjusting journal entry to record bad debt expense for the year. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation

Debit

Credit


(b)

What is the ending (adjusted) balance in Allowance for Doubtful Accounts?

Ending (adjusted) balance in Allowance for Doubtful Accounts $


(c)

What is the cash (net) realizable value?

Cash (net) realizable value $

Solutions

Expert Solution

Crane Company
Answer a Amount $
Accounts receivable 550,000.00
Uncollectible amount at 2%     11,000.00
Add: Debit balance in allowance for doubtful account       5,300.00
Bad Debt Expense for the year     16,300.00
Adjusting entry
Account Debit $ Credit $
Bad Debt Expense     16,300.00
Allowance for doubtful account 16,300.00
Answer b Amount $
Ending (adjusted) balance in Allowance for Doubtful Accounts     11,000.00
Answer c
Accounts receivable (Gross) 550,000.00
Less: Allowance for Doubtful Accounts     11,000.00
Accounts receivable (Net) 539,000.00

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $318,000...
Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $318,000 and credit sales are $1,000,000. An aging of accounts receivable shows that approximately 7% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,600 before adjustment? a. Bad Debt Expense 19,660 Allowance for Doubtful Accounts 19,660 b. Bad Debt Expense 18,660 Allowance for Doubtful Accounts 18,660 c. Bad...
Sheridan Company uses the percentage of sales method to record bad debt expense. It estimates that...
Sheridan Company uses the percentage of sales method to record bad debt expense. It estimates that 2% of net credit sales (all made on account) will become uncollectible. Sheridan Company reported the following information in its general ledger for the year ended September 30, 2021: Sales Debit Credit 954,000 Accounts Receivable Debit Credit 257,000 Allowance for Doubtful Accounts Debit Credit 2,000 1) Prepare the adjusting entry to record bad debt expense at year end. 2) Calculate the carrying amount of...
Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $55,000. If the...
Using the percentage-of-receivables method for recording bad debt expense, estimated uncollectible accounts are $55,000. If the balance of Allowance for Doubtful Accounts is $11,000 debit before adjustment, what is the balance after adjustment? A) $55,000 B) $11,000 C) $66,000 D) $44,000
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...
Penny Company uses the aging approach to estimate bad debt expense. The ending balance of each...
Penny Company uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $285,000; (2) up to 120 days past due, $50,000; and (3) more than 120 days past due, $21,000. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 2.5 percent, (2) 12...
Brown Cow Dairy uses the aging approach to estimate bad debt expense. The ending balance of...
Brown Cow Dairy uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $12,500; (2) up to 120 days past due, $5,500; and (3) more than 120 days past due, $5,000. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 4 percent, (2)...
Brown Cow Dairy uses the aging approach to estimate bad debt expense. The ending balance of...
Brown Cow Dairy uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, $14,000, (2) up to 120 days past due, $4,500, and (3) more than 120 days past due, $2,500. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end due to uncollectibility is (1) 2 percent, (2)...
Using the percentage-of-receivables method for recording bad debts expense, estimated uncollectible accounts are €23,000. If the...
Using the percentage-of-receivables method for recording bad debts expense, estimated uncollectible accounts are €23,000. If the balance of the Allowance for Doubtful Accounts is €2,000 credit before adjustment, what is the balance of the Allowance for Doubtful Accounts end of that period? a. €2,000 b. €21,000 c. €23,000 d. €25,000
Question: Peoples Company uses the percentage of Sales method to determine bad debt expense; based on...
Question: Peoples Company uses the percentage of Sales method to determine bad debt expense; based on company's history, 3% of the Sales balance will be uncollectible. Year Sales Write-offs Accounts Receivable 20x5 $5,000,000 $1,000,000 20x6 $7,000,000 $120,000 $1,200,000 20x7 $9,000,000 $190,000 $1,400.000 20x8 $10,000,000 $200,000 $1,600,000 Based on the information above, determine, the following: A. Bad Debt Expense B.Allowance for Uncollectible Accounts: view the Written Example to see how to calculate, there is a spreadsheet attached. C. Net Realizable Value...
Custom Designs, Inc. uses the allowance method to estimate and record bad debt expense. It has...
Custom Designs, Inc. uses the allowance method to estimate and record bad debt expense. It has an accounts receivable balance of $90,000 and an allowance for uncollectible accounts credit balance of $6,200. Suppose an account receivable balance of $1,200 from one customer is determined to be uncollectible and is written off. What was the net accounts receivable amount before and after the write off? On January 1, 20X1, Mechanical Engineers, Inc. had an accounts receivable balance of $506,000 and a...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT