Question

In: Accounting

STU Corporation had at the end of fiscal 2016 a $10,000 debit balance in its accounts...

STU Corporation had at the end of fiscal 2016 a $10,000 debit balance in its accounts receivable account. The allowance for doubtful accounts amounted to $500 at that time.

A) An aging of accounts receivable at year end indicates the need for an allowance balance of $700. What adjusting would be made to accommodate this estimate at year end?

B) What would the entry for uncollectible accounts expense be if STU used the percentage of credit sales method when total credit sales in 2016 was $12,000 and the usual uncollectible loss amounted to one percent of credit sales?

Solutions

Expert Solution

  • All working forms part of the answer
  • Requirement (A)

Unadjusted balance in Allowance for Doubtful account

$                      500.00

Balance required in Allowance for Doubtful account based on ageing of accounts receivables

$                      700.00

Amount by which allowance account to be credited by [$700 - $500]

$                      200.00

Accounts titles

Debit

Credit

Bad Debt expense

$                      200.00

Allowance for doubtful accounts

$                     200.00

(uncollectible expense recorded)

  • Requirement (B)

Total Credit Sale

$                    12,000.00

Expected uncollectible 1%

$                          120.00   [12000 x 1%]

Accounts titles

Debit

Credit

Bad Debt expense

$                          120.00

Allowance for doubtful accounts

$                            120.00

(uncollectible expense recorded)

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Valley Company’s adjusted trial balance on August 31, 2016, its fiscal year-end, follows. Debit Credit Merchandise...
Valley Company’s adjusted trial balance on August 31, 2016, its fiscal year-end, follows. Debit Credit Merchandise inventory $ 37,000 Other (noninventory) assets 148,000 Total liabilities $ 42,735 Common stock 49,806 Retained earnings 72,788 Dividends 8,000 Sales 253,080 Sales discounts 3,872 Sales returns and allowances 16,703 Cost of goods sold 98,034 Sales salaries expense 34,672 Rent expense—Selling space 11,895 Store supplies expense 3,037 Advertising expense 21,512 Office salaries expense 31,635 Rent expense—Office space 3,037 Office supplies expense 1,012 Totals $ 418,409...
In its fiscal 2016 balance sheet, Airways Corporation, reported cash of $443 million at year-end. The...
In its fiscal 2016 balance sheet, Airways Corporation, reported cash of $443 million at year-end. The statement of cash flows reports that cash increased by $115 million during the year and that net cash flow from operating activities was $1,632 million. What was the cash flow from investing activities during the year? A. $533 million cash outflow B. $715 million cash inflow C. $533 million cash inflow D. $715 million cash outflow E. There is not enough information to determine...
The allowance for doubtful accounts has a debit balance of $1,000 at the end of the...
The allowance for doubtful accounts has a debit balance of $1,000 at the end of the year (before adjustment), and uncollectible accounts expense is estimated at $10,000. If accounts receivable are $700,000, the amount of the adjusting entry to record the allowance for doubtful accounts using the aging of receivables method is:
On December 31, 2013, when its Allowance for Doubtful accounts had a debit balance of $1,400,...
On December 31, 2013, when its Allowance for Doubtful accounts had a debit balance of $1,400, Hunt co. estimates that 9% of its accounts receivable balance of $90000 will become uncollectible and records the necessary adjustment to Allowance for Doubtful Accounts. On may 11, 2014, Hunt Co. determined that J. Byrd's account was uncollectible and wrote of $1,200. On June 12, 2014, Byrd paid the amount previously written off. Prepare the journal entries on December 31, 2013, May 11, 2014,...
At the end of the current year, the accounts receivable account has a debit balance of...
At the end of the current year, the accounts receivable account has a debit balance of $932,000 and sales for the year total $10,570,000. The allowance account before adjustment has a debit balance of $12,600. Bad debt expense is estimated at 1/2 of 1% of sales. The allowance account before adjustment has a debit balance of $12,600. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $40,300. The allowance account before adjustment has a credit...
At the end of the current year, the accounts receivable account has a debit balance of...
At the end of the current year, the accounts receivable account has a debit balance of $1,095,000 and sales for the year total $12,420,000. The allowance account before adjustment has a debit balance of $14,800. Bad debt expense is estimated at 3/4 of 1% of sales. The allowance account before adjustment has a debit balance of $14,800. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $47,400. The allowance account before adjustment has a credit...
At the end of the current year, the accounts receivable account has a debit balance of...
At the end of the current year, the accounts receivable account has a debit balance of $777,000 and sales for the year total $8,810,000. The allowance account before adjustment has a debit balance of $10,500. Bad debt expense is estimated at 3/4 of 1% of sales. The allowance account before adjustment has a debit balance of $10,500. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $33,600. The allowance account before adjustment has a credit...
At the end of its 2017 fiscal year-end Hopkins Corporation had 50,000 shares of preferred stock...
At the end of its 2017 fiscal year-end Hopkins Corporation had 50,000 shares of preferred stock outstanding. The preferred stock has a book value of $30 per share. In addition, Hopkins paid $75,000 in dividends to preferred shareholders in 2017. Hopkins also has $2,500,000 of interest bearing debt outstanding and its after-tax cost of debt is 6.4%. The market value of Hopkins Corporation’s common stock equity at year end is $6,240,000 and the company's cost of common equity is 9.4%....
Valley Company’s adjusted trial balance on August 31, 2017, its fiscal year-end, follows.    Debit Credit...
Valley Company’s adjusted trial balance on August 31, 2017, its fiscal year-end, follows.    Debit Credit Merchandise inventory $ 41,000 Other (noninventory) assets 130,400 Total liabilities $ 25,000 Common stock 10,000 Retained earnings 94,550 Dividends 8,000 Sales 225,600 Sales discounts 2,250 Sales returns and allowances 12,000 Cost of goods sold 74,500 Sales salaries expense 32,000 Rent expense—Selling space 8,000 Store supplies expense 1,500 Advertising expense 13,000 Office salaries expense 28,500 Rent expense—Office space 3,600 Office supplies expense 400 Totals $...
Valley Company’s adjusted trial balance on August 31, 2017, its fiscal year-end, follows. Debit Credit Merchandise...
Valley Company’s adjusted trial balance on August 31, 2017, its fiscal year-end, follows. Debit Credit Merchandise inventory $ 42,000 Other (non inventory) assets 168,000 Total liabilities $ 48,510 Common stock 10,000 Retained earnings 127,550 Dividends 8,000 Sales 287,280 Sales discounts 4,395 Sales returns and allowances 18,960 Cost of goods sold 110,754 Sales salaries expense 39,357 Rent expense—Selling space 13,502 Store supplies expense 3,447 Advertising expense 24,419 Office salaries expense 35,910 Rent expense—Office space 3,447 Office supplies expense 1,149 Totals $...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT