Question
In: Accounting
Entry for Uncollectible Accounts Easy Rider International is a wholesaler of motorcycle supplies. An aging of...
Entry for Uncollectible Accounts
Easy Rider International is a wholesaler of motorcycle
supplies. An aging of the company's accounts receivable on December
31, 20Y3, and a historical analysis of the percentage of
uncollectible accounts in each age category are as follows:
Age Interval
Balance
Percent
Uncollectible
Not past due
$1,850,000
1
%
1–30 days past due
750,000
2
31–60 days past due
100,000
6
61–90 days past due
60,000
14
91–180 days past due
45,000
60
Over 180 days past due
25,000
90
$2,830,000
Assume that the allowance for doubtful accounts for Easy Rider
International had a negative balance of $(13,300) as of December
31, 20Y3.
Illustrate the effects of the adjustment for uncollectible
accounts as of December 31, 20Y3, on the accounts and financial
statements.
If no account or activity is affected, select "No effect" from
the dropdown list and leave the corresponding number entry box
blank. Enter account decreases and cash outflows as negative
amounts.
Statement of Cash Flows
Balance Sheet
Assets
=
Liabilities
+
Stockholders' Equity
+
=
+
Dec. 31.
Statement of Cash Flows
Income Statement
Solutions
Expert Solution
Solution :
| Computation of estimated uncollectibles - Easy rider | |||
| Ageing | Accounts receivables | % Uncollectible | Estimated uncollectibles |
| Current | $1,850,000.00 | 1% | $18,500.00 |
| 1-30 days | $750,000.00 | 2% | $15,000.00 |
| 31-60 days | $100,000.00 | 6% | $6,000.00 |
| 61-90 days | $60,000.00 | 14% | $8,400.00 |
| 91-180 days | $45,000.00 | 60% | $27,000.00 |
| Over 180 days | $25,000.00 | 90% | $22,500.00 |
| $2,830,000.00 | $97,400.00 | ||
Balance in allowance for uncollectible accounts = ($13,300)
Required provision of bad debts to be recorded in financial statement = $97,400 + $13,300 = $110,700
Effect on accounts and financial statements:
Statement of cash flows:
There will be no effect on statement of cash flows as bad debts expense is non cash item and does not effect cash in any way.
Balance sheet:
Assets = -$110,700
=
Liabilities = No effect
+
Stockholder's Equity = -$110,700
Income Statement:
Bad debts expense = $110,700
ekkarill92 answered 1 year agoRelated Solutions
Exercise 5-10A Record the adjusting entry for uncollectible accounts using the aging method (LO5-5) Mercy Hospital...
Exercise 5-10A Record the adjusting entry for uncollectible
accounts using the aging method (LO5-5) Mercy Hospital has the
following balances on December 31, 2021, before any adjustment:
Accounts Receivable = $62,000; Allowance for Uncollectible Accounts
= $1,300 (credit). Mercy estimates uncollectible accounts based on
an aging of accounts receivable as shown below. Age Group Amount
Receivable Estimated Percent Uncollectible Not yet due $ 42,000 20
% 0–30 days past due 10,200 25 % 31–90 days past due 7,200 40 %...
Performace bike co is a wholesaler of motorcycle supplies.An aging of the company's account receivable on December 31
Performace bike co is a wholesaler of motorcycle supplies.An aging of the company's account receivable on December 31 and a historical analysis of the percentage of uncollectible accounts in each age category are as followsAge Interval BalancePercent UncollectibleNot past due$3,250,0000.8%1-30 days past due10,50,0002.4%31-60 days past due7,80,0007.061-90 days past due3,20,00018.091-180 days past due2,40,00034.0over 180 days past due1,50,00085.0Estimate the proper balance of the allowance for doubtful accounts as of December 31
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?...
Create an example of how to estimate and record uncollectible accounts using the AGING OF RECEIVABLES...
Create an example of how to estimate and record uncollectible
accounts using the AGING OF RECEIVABLES METHOD by addressing the
following points:
1. Calculate your estimate and include all detail to support
your calculation.
2. What account should be DEBITED, and for how much money?
3. What account should be CREDITED, and for how much money?
(Accounts receivable and uncollectible accounts—aging of receivables method) On December 31, 2019, Ajacks Company reported the...
(Accounts receivable and uncollectible accounts—aging of
receivables method)
On December 31, 2019, Ajacks Company reported the following
information in its financial statements:
Accounts receivable
$1,193,400
Allowance for doubtful accounts
81,648
Bad debts expense
80,448
During 2020, the company had the following transactions related
to receivables:
a. Sales were
$10,560,000, of which $8,448,000 were on account.
b. Collections of
accounts receivable were $7,284,000.
c. Writeoffs of
accounts receivable were $78,000.
d. Recoveries of
accounts previously written off as uncollectible were $8,100....
Domino Company uses the aging of accounts receivable method to estimate uncollectible accounts expense. Domino began...
Domino Company uses the aging of accounts receivable method to
estimate uncollectible accounts expense. Domino began Year 2 with
balances in Accounts Receivable and Allowance for Doubtful Accounts
of $44,010 and $3,440, respectively. During the year, the company
wrote off $2,620 in uncollectible accounts. In preparation for the
company's Year 2 estimate, Domino prepared the following aging
schedule:
Number of
days
Receivables
% Likely to be
past due
amount
uncollectible
Current
$
70,000
1%
0-30
26,700
5%
31-60
6,760
10%...
Young and Restless Corporation (YRC) uses two aging categories to estimate uncollectible accounts.
Young and Restless Corporation (YRC) uses two aging categories to estimate uncollectible accounts. Accounts less than 60 days are considered current and have a 5% uncollectible rate. Accounts more than 60 days are considered delinquent and have a 30% uncollectible rate.. YRC’s Allowance for Doubtful Accounts currently has an unadjusted credit balance of $551
If YRC has $54,080 of current accounts and $4,910 of delinquent accounts, how much should be reported in the Allowance for Doubtful Accounts? 54080*.05 +...
Young and Old Corporation (YOC) uses two aging categories to estimate uncollectible accounts. Accounts less than...
Young and Old
Corporation (YOC) uses two aging categories to estimate
uncollectible accounts. Accounts less than 60 days are considered
young and have a 3% uncollectible rate. Accounts more than 60 days
are considered old and have a 40% uncollectible rate.
Required:
1.
If YOC has $102,000 of
young accounts and $420,000 of old accounts, how much should be
reported in the Allowance for Doubtful Accounts?
2.
If YOC’s Allowance for
Doubtful Accounts currently has an unadjusted credit balance of...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Merger Analysis TransWorld Communications Inc., a large telecommunications company, is evaluating the possible acquisition of Georgia...
- Journal Entries and Trial Balance Elite Realty acts as an agent in buying, selling, renting, and...
- In racket Assume that the elements of a list are indexed starting with 1. Write a...
- Describe System Development Life Cycle (SDLC) and how it is used.
- What symbolism do you find in the play,Oedipus?
- • Using the Scanner class to obtain input from the user. • Using printf to output...
- In each of the following situations, develop a tentative plan for the client. List the various...
ADVERTISEMENT