Question
In: Accounting
Seahawks’ Touchdowns, Inc. reported the following on its December 31, 2019 balance sheet (000’s omitted): Accounts...
Seahawks’ Touchdowns, Inc. reported the following on its December 31, 2019 balance sheet (000’s omitted):
Accounts Receivable, net of allowance for doubtful accounts of $462 $1,788
The company makes its adjusting entry for bad debts at the end of the year. During 2020, cash collections were $3,432. In addition, $368 in accounts receivable were written off and $3 was collected from an account written off in 2018. An aging of accounts receivable reveals the following:
|
Age Group |
Amount |
Estimated % Uncollectible |
||||||
|
current |
880 |
5% |
||||||
|
31-60 |
550 |
14% |
||||||
|
61-90 |
440 |
50% |
||||||
|
91-120 |
220 |
75% |
||||||
|
121+ |
110 |
90% |
||||||
|
2,200 |
||||||||
Show your work and highlight your answer. T-accounts are included above if needed.
A. What were credit sales during 2020? _________________________
The next two questions are independent of each other.
B. If the company records bad debts based on the aging analysis, what is the 12/31/20 adjusting entry? NRV of A/R? Show your work and highlight your answers.
Adjusting Journal Entry:
Net Realizable Value of Accounts Receivable 12/31/20: _________________________
C. If the company records bad debts as 12.0% of credit sales, what is the 12/31/20 adjusting entry? NRV of A/R? Show your work and highlight your answers.
Adjusting Journal Entry:
Net Realizable Value of Accounts Receivable 12/31/20: _________________________
Solutions
Expert Solution
NOTE:
Bad debt Recovery entry is :
Therefore it has no impact on Bad Debt proviion calculations
Ans-(A)
Credit Sales for the year is ('000) - 2012
Calculated as hereunder (amounts ini '000)
Ans-(B)
ADJUSTMENT JOURNAL
Ans-(C)
12% o Credit Sales = 12% * 2012 = 241.44
Additional Provision required :
241.44 - 94 = 147.44
JOURNAL:
ekkarill92 answered 1 year agoRelated Solutions
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