Question
In: Accounting
Question 7 (20 minutes) (AR and AFDA) Gauthier Services uses the percentage of accounts receivable method...
Question 7 (20 minutes) (AR and AFDA)
Gauthier Services uses the percentage of accounts receivable method
for estimating bad debts, and concludes at the end of the fiscal
year that 1.5 % of accounts receivable will become uncollectible.
Sales are $776,500 for the fiscal year ending December 31, 2010 and
sales returns and allowances amounted to $20,800. All sales were on
account and the balance of accounts receivable at December 31, 2010
was $185,000 and the allowance for doubtful accounts, before any
year-end adjustments, had a debit balance of $449.
Instructions
a) Prepare any required adjusting journal entry at December 31, 2010
b) Assume now that the percentage of sales method is used instead of the percentage of accounts receivable basis and that ½ of 1 % of net credit sales are estimated as being uncollectible. Also assume that the allowance for doubtful accounts has a debit balance of $650. Prepare any required adjusting journal entry at December 31, 2010.
c) Show how net accounts receivable would be reported on the balance sheet after recording the adjusting journal entry at December 31, 2010, under the assumption (b) above.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Example of percentage of accounts receivable method
Example of percentage of accounts receivable method
Mazie Supply Co. uses the percent of accounts receivable method.
Exercise 7-7 Percent of accounts receivable method LO P3 Mazie Supply Co. uses the percent of accounts receivable method. On December 31, it has outstanding accounts receivable of $114,500, and it estimates that 4% will be uncollectible. Prepare the year-end adjusting entry to record bad debts expense under the assumption that the Allowance for Doubtful Accounts has: (a) a $1,947 credit balance before the adjustment. (b) a $573 debit balance before the adjustment.
Explain the percentage of accounts receivable and the accounts receivable aging allowance methods.
Explain the percentage of accounts receivable and the accounts
receivable aging allowance methods.
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...
Ervin Company uses the allowance method to account for uncollectible accounts receivable
Ervin Company uses the allowance method to account for
uncollectible accounts receivable. Bad debt expense is established
as a percentage of credit sales. For 2021, net credit sales totaled
$5,900,000, and the estimated bad debt percentage is 1.50%. No
previously written-off accounts receivable were reinstated during
2021. The allowance for uncollectible accounts had a credit balance
of $56,000 at the beginning of 2021 and $47,000, after adjusting
entries, at the end of 2021.Required:1. What is bad debt expense for 2021...
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?...
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%...
Analyzing and Reporting Receivable Transactions and Uncollectible Accounts Using Percentage- of-Sales Method to Estimate Bad Debt...
Analyzing and Reporting Receivable Transactions and
Uncollectible Accounts Using Percentage- of-Sales Method to
Estimate Bad Debt Expense
At the beginning of the year, Penman Company had the following
account balances.
Accounts receivable...................... $356,000
Allowance for uncollectible accounts......... 21,400
During the year, Penman’s credit sales were $2,008,000, and
collections on accounts receivable were $1,963,000. The following
additional transactions occurred during the year.
Feb. 17 Wrote off Bava’s account, $8,200.
May 28 Wrote off Reed’s account, $4,800.
Dec. 15 Wrote off Fischer’s...
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Accounts Receivable has a balance of $545,000; Allowance for
Doubtful Accounts has a debit balance of $5,000; and sales for the
year total $2,450,000. Using the aging method, the balance of
Allowance for Doubtful Accounts is estimated as $26,000. a.
Determine the amount of the adjusting entry for uncollectible
accounts. $ b. Determine the adjusted balances of Accounts
Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense.
Accounts Receivable...
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