Question
In: Accounting
Option #1: Bad Debts Paisley Corporation operates in an industry that has a high rate of...
Option #1: Bad Debts
Paisley Corporation operates in an industry that has a high rate of bad debts. The year-end balance reported in the balance sheet for the Allowance for Doubtful Accounts will be based on the aging schedule shown below:
|
Days Account Outstanding |
Amount |
Probability of Not Collecting |
|---|---|---|
|
Less than 16 days |
$351,600 |
.03 |
|
Between 16 and 30 days |
122,400 |
.11 |
|
Between 31 and 45 days |
84,000 |
.17 |
|
Between 46 and 60 days |
66,000 |
.24 |
|
Between 61 and 75 days |
33,600 |
.40 |
|
Over 75 days |
$ 9,600 |
.70 |
Before year-end adjustments, Chatter’s Allowance for Doubtful Accounts had a debit balance of $6,000.
What is the appropriate balance for the Allowance for Doubtful Accounts at year-end?
Show how accounts receivable would be presented on the balance sheet.
What is the dollar effect of the year-end bad debt adjustment on the before-tax income?
Your well-written paper must be 2 to 3 pages in length. Cite at least three peer-reviewed sources, in addition to the required readings for this module. Please provide a detailed answer. Thanks in advance.
Solutions
Expert Solution
| calculation of allowance of doubtful debt at year end | |||||
| days a/c outstanding | amount (a) | probability of not collecting (b) | allowance (a)*(b) | ||
| less than 16 days | $ 3,51,600.00 | 0.03 | $ 10,548.00 | ||
| between 16 and 30 days | $ 1,22,400.00 | 0.11 | $ 13,464.00 | ||
| between 31 and 45 days | $ 84,000.00 | 0.17 | $ 14,280.00 | ||
| between 46 and 60 days | $ 66,000.00 | 0.24 | $ 15,840.00 | ||
| between 61 and 75 days | $ 33,600.00 | 0.4 | $ 13,440.00 | ||
| over 75days | $ 9,600.00 | 0.7 | $ 6,720.00 | ||
| total | $ 6,67,200.00 | $ 74,292.00 | |||
| THEREFORE THE ALLOWANCE FOR DOUBTFUL DEBT AT THE YEAR END = $74292 | |||||
| B) Current assets | |||||
| accounts receviable | $ 6,67,200.00 | ||||
| less: allowance for doubtful | $ -74,292.00 | ||||
| accounts receviable (net) | $ 5,92,908.00 | ||||
| C) dollar factor of the year end bad debt adujustment = 74292+6000(doubt full debt debit balance) | |||||
| 80292 | |||||
ekkarill92 answered 8 months agoRelated Solutions
Shamrock Corporation operates in an industry that has a high rate of bad debts. Before any...
Shamrock Corporation operates in an industry that has a high
rate of bad debts. Before any year-end adjustments, the balance in
Shamrock's Accounts Receivable account was $585,400 and Allowance
for Doubtful Accounts had a credit balance of $42,510. The year-end
balance reported in the balance sheet for Allowance for Doubtful
Accounts will be based on the aging schedule shown below.
Days Account Outstanding
Amount
Probability of
Collection
Less than 16 days $313,200 0.98
Between 16 and 30 days 112,600 0.90...
Metlock Corporation operates in an industry that has a high rate of bad debts. Before any...
Metlock Corporation operates in an industry that has a high rate
of bad debts. Before any year-end adjustments, the balance in
Metlock's Accounts Receivable account was $592,400 and Allowance
for Doubtful Accounts had a credit balance of $44,820. The year-end
balance reported in the balance sheet for Allowance for Doubtful
Accounts will be based on the aging schedule shown below.
Days Account Outstanding
Amount
Probability of
Collection
Less than 16 days $315,900 0.97
Between 16 and 30 days 116,800 0.90...
Pearl Corporation operates in an industry that has a high rate of bad debts. Before any...
Pearl Corporation operates in an industry that has a high rate
of bad debts. Before any year-end adjustments, the balance in
Pearl's Accounts Receivable account was $593,800 and Allowance for
Doubtful Accounts had a credit balance of $44,400. The year-end
balance reported in the balance sheet for Allowance for Doubtful
Accounts will be based on the aging schedule shown below. Days
Account Outstanding Amount Probability of Collection Less than 16
days $314,200 0.97 Between 16 and 30 days 118,700 0.90...
Manilow Corporation operates in an industry that has a high rate of bad debts. Before any...
Manilow Corporation operates in an industry that has a high rate
of bad debts. Before any year‐end adjustments, the balance in
Manilow’s Accounts Receivable account was $650,000 and Allowance
for Doubtful Accounts had a credit balance of $45,500. The year‐end
balance reported in the balance sheet for Allowance for Doubtful
Accounts will be based on the aging schedule shown below. The
amount of accounting receivable write‐offs during the year in the
amount of $19,500 has not been recorded yet.
Days...
Manilow Corporation operates in an industry that has a high rate of bad debts. Before any...
Manilow Corporation operates in an industry that has a high rate
of bad debts. Before any year-end adjustments, the balance in
Manilow's Accounts Receivable account was $555,000 and Allowance
for Doubtful Accounts had a credit balance of $40,000. The year-end
balance reported in the balance sheet for Allowance for Doubtful
Accounts will be based on the aging schedule shown below.
Days Account Outstanding
Amount
Probability of
Collection
Less than 16 days
$300,000
0.98
Between 16 and 30 days
100,000
0.90...
Kingbird Corporation operates in an industry that has a high rate of bad debts. Before any...
Kingbird Corporation operates in an industry that has a high
rate of bad debts. Before any year-end adjustments, the balance in
Kingbird's Accounts Receivable account was $593,900 and Allowance
for Doubtful Accounts had a credit balance of $40,480. The year-end
balance reported in the balance sheet for Allowance for Doubtful
Accounts will be based on the aging schedule shown below.
Days Account Outstanding
Amount
Probability of
Collection
Less than 16 days
$314,700
0.98
Between 16 and 30 days
118,900
0.90...
Manilow Corporation operates in an industry that has a high rate of bad debts. Before any...
Manilow Corporation operates in an
industry that has a high rate of bad debts. Before any year-end
adjustments, the balance in Manilow's Accounts Receivable was
$555,000 and Allowance for Doubtful Accounts had a credit balance
of $40,000. The year-end balance reported in the statement of
financial position for Allowance for Doubtful Accounts will be
based on the aging schedule shown below.
Days Account Outstanding
Amount
Probability of Collection
Less than 16 days
$300,000
.98
16–30 days
100,000
.90
31–45 days
...
Module 4: Chatter Corporation operates in an industry that has a high rate of bad debts....
Module 4: Chatter Corporation operates in an industry that has a
high rate of bad debts. Before any year-end adjustments, the
balance in Chatter’s accounts receivable account is $556,000, and
the allowance for doubtful accounts has a debit balance of $5,000.
The year-end balance reported in the balance sheet for the
allowance for doubtful accounts will be based on the aging schedule
shown here:
Days Account Outstanding
Amount
Probability of Collection
Less than 16 days
$293,000
.97
Between 16 and...
Manilow Company in an industry that has a high rate of bad debts. Before any year-end...
Manilow Company in an industry that has a high rate of bad
debts. Before any year-end adjustments, the balance in Manilow's
Accounts Receivable account was $593,900 and Allowance for Doubtful
Accounts had a credit balance of $40,480. The year-end balance
reported in the balance sheet for Allowance for Doubtful Accounts
will be based on the aging schedule shown below.
1. What is the appropriate balance for Allowance for Doubtful
Accounts at year-end?
2. Show how accounts receivable would be presented...
Problem 7-3 (Part Level Submission) Pearl Corporation operates in an industry that has a high rate...
Problem 7-3 (Part Level Submission) Pearl Corporation operates
in an industry that has a high rate of bad debts. Before any
year-end adjustments, the balance in Pearl's Accounts Receivable
account was $595,600 and Allowance for Doubtful Accounts had a
credit balance of $40,350. The year-end balance reported in the
balance sheet for Allowance for Doubtful Accounts will be based on
the aging schedule shown below. Days Account Outstanding Amount
Probability of Collection Less than 16 days $314,500 0.97 Between
16...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Describe in detail two modern applications of electromagnets. Do these electromagnets draw a large amount of...
- Refunding Analysis Mullet Technologies is considering whether or not to refund a $250 million, 13% coupon,...
- in java What object is passed to the start method in a JavaFX program? What should...
- QUESTION ONE Briefly explain the following types of errors: (i) Error of commission &n
- List the basic principles of the distillation tower at least 4 principal and why there are...
- Imagine you're a business owner: If waiting in lines is a truly inescapble event for your...
- A piston-cylinder device initially contains 0.20(kg) of steam at 3.5(MPa), 300(C). The steam loses heat to...
ADVERTISEMENT