Question
In: Accounting
Which one of the following is the most accurate method for estimating uncollectible accounts? Select one:...
Which one of the following is the most accurate method for estimating uncollectible accounts?
Select one:
a. Aging of Accounts Receivable
b. Indirect write-off method
c. Percentage of Accounts Receivable
d. Percentage of sales
Solutions
Expert Solution
Which one of the following is the most accurate method for estimating uncollectible accounts?
The correct answer for the question is Option D - Percentage of Sales. Under this method, an allowance is created for bad debts based on the total credit sales of that period. A percentage of sales is estimated to be uncollectible and this percentage is determined by use of various factors like previous year data, competitor analysis, nature of the debtors. industry the company operates in, etc. This is the most accurate method for estimating uncollectible accounts.
Option A is incorrect. Under the Aging of accounts receivable method, the accounts receivable are classified according to their age and a percentage of uncolectible is estimated for each of the period for which accounts receivables are due.
Option B is incorrect . Indirect write off method is not the most accurate method for estimating uncollectible accounts.
Option C is incorrect . Under this method an allowance is created based on the pending accounts receivable balance from the debtors. However, this is not the most accurate method for estimating uncollectibles.
Please let me know if you have any questions via comments and all the best :) !
ekkarill92 answered 1 year agoRelated Solutions
Artis, Inc. uses the aging of accounts receivable method for estimating uncollectible accounts. As of October...
Artis, Inc. uses the aging of accounts receivable method for
estimating uncollectible accounts. As of October 31, total Accounts
Receivable was $17,800 of which $8,400 was 0 - 30 days old; $5,900
was 31 - 60 days old; and the remainder was over 60 days old. Artis
estimates 1% of accounts 0 - 30 days old will be uncollectible; 5%
of accounts 31 - 60 days old will be uncollectible; and 15% of
accounts over 60 days old will be...
Grana Inc. uses the Aging of Accounts Receivable method for estimating uncollectible accounts. The accounting records...
Grana Inc. uses the Aging of Accounts Receivable method
for estimating uncollectible accounts. The accounting records show
the following information at the end of the year:
Number of Days Unpaid
0 - 30
31 - 60
61 - 90
Over 90
Accounts Receivable
$370,000
$240,000
$110,000
$80,000
Estimated % Uncollectible
10%
15%
25%
5%
If the unadjusted credit balance in the Allowance for
Doubtful Accounts account before is $15,000, what would be the
amount of the adjustment for bad debts?...
Grana Inc. uses the Aging of Accounts Receivable method for estimating uncollectible accounts. The accounting records...
Grana Inc. uses the Aging of Accounts Receivable method
for estimating uncollectible accounts. The accounting records show
the following information at the end of the year:
Number of Days Unpaid
0 - 30
31 - 60
61 - 90
Over 90
Accounts Receivable
$370,000
$240,000
$110,000
$80,000
Estimated % Uncollectible
10%
15%
25%
5%
If the unadjusted credit balance in the Allowance for
Doubtful Accounts account before is $15,000, what would be the
amount of the adjustment for bad debts?...
Under the allowance method for estimating uncollectible accounts, the entry to write off an account: A)...
Under the allowance method for
estimating uncollectible accounts, the entry to write off an
account:
A) reduces total assets
B) reduces net income
C) has no effect on total assets
D) increases net income
Why is the answers c)
I dont not understand since a write off would credit account
receivable ( assets) and debit allowance of doubtful account.
Which of the two methods of estimating uncollectibles provides for the most accurate estimate of the...
Which of the two methods of estimating uncollectibles provides
for the most accurate estimate of the current net realizable value
of the receivables? Explain in 150 words
Which of the following is most accurate about DNA replication and transcription/translation (central dogma)? Select one:...
Which of the following is most accurate about DNA replication
and transcription/translation (central dogma)?
Select one:
a. DNA replication and transcription/translation produce the
same molecules.
b. DNA replication occurs in some cells, while
transcription/translation occurs in virtually all cells.
c. The same enzyme is responsible for DNA replication and
transcription/translation.
d. DNA replication occurs in virtually all cells, while
transcription/translation occurs in some cells.
e. DNA replication occurs in somatic cells while
transcription/translation occurs only in gametes.
Under the allowance method for uncollectible accounts
Under the allowance method for uncollectible accounts
(a) the net realizable value of accounts receivable is greater before an account is written off than after it is written off.
(b) Bad Debts Expense is debited when a specific account is written off as uncollectible.
(c) the net realizable value of accounts receivable in the statement of financial position is the same before and after an account is written off.
(d) Allowance for Doubtful Accounts is closed each year to Income...
Problem -4 Megan's Products is undecided about which base to use in estimating uncollectible accounts. On...
Problem -4
Megan's Products is undecided about which base to use in
estimating uncollectible accounts. On December 31, 2016, the
balance in Accounts Receivable was $308,000 and net credit sales
amounted to $2,700,000 during 2016. An aging analysis of the
accounts receivable indicated that $31,000 in accounts are expected
to be uncollectible. Past experience has shown that about 1% of net
credit sales eventually are uncollectible.
Instructions
Prepare the adjusting entries to record estimated bad debt
expense using the (1)...
Estimating Uncollectible Accounts and Reporting Accounts Receivable Collins Company analyzes its accounts receivable at December 31,...
Estimating Uncollectible Accounts and Reporting Accounts
Receivable
Collins Company analyzes its accounts receivable at December 31,
and arrives at the aged categories below along with the percentages
that are estimated as uncollectible.
Age Group
Accounts
Receivable
Estimated
Loss %
0-30 days past due
$110,000
1%
31-60 days past due
40,000
2
61-120 days past due
27,000
5
121-180 days past due
14,000
10
Over 180 days past due
9,000
25
Total accounts receivable
$200,000
The balance of the allowance for...
Regarding accounts receivable and an allowance for uncollectible accounts, which of the following statements is false?...
Regarding accounts receivable and an allowance for uncollectible
accounts, which of the following statements is false?
Group of answer choices
Net realizable value equals the sales price of an item less
reasonable further costs to both make the item ready to sell and to
sell it.
An aging of accounts receivable is a determination of how long
each receivable has been on the books.
The net realizable value of accounts receivable is decreased
when a bad debt is written off....
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