Farm Fresh Produce Co. sells produce wholesale to local groceries on account. The accounts receivable department...

Farm Fresh Produce Co. sells produce wholesale to local groceries on account. The accounts receivable department had the following information on December 31, 2009:

Total Credit sales $400,000.00

Balance of allowance for doubtful accounts ($950.00)

Bad debt as a percentage of credit sales 0.50%

Days Past Due Amount J

J Company 34 5,000.00

H Company 74 950.00

L Company 18 32,000.00

T Company 22 4,350.00

F Company 61 2,000.00

B Company 145 1,750.00

Age Class Percentage Uncollectible

0-30 2%

30-60 5%

60-90 12%

90-120 20%

120+ 75%

Instructions:

1. Create an aging of receivable report and determine the allowance for doubtful accounts.

2. Determine the allowance for doubtful accounts based on the percentage of sales method.

3. Illustrate the effects on the accounts and financial statements using both methods.

4. Illustrate the effects on the accounts and financial statements assuming Farm Fresh Produce Co. wrote off the balance of T Company on April 3, 2010.

5. Illustrate the effects on the accounts and financial statements assuming that T Company paid off its account on May 22, 2010.

Solutions

Expert Solution

ekkarill92 answered 2 years ago

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