Question 15 of 21 - Practice Chapter 7

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Saint Mary's University *

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3351

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Accounting

Date

Apr 3, 2024

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3/27/24, 6:59 PM Question 15 of 21 - Practice Chapter 7 https://education.wiley.com/was/ui/v2/assessment-player/index.html?launchId=842f49e4-6c91-4e70-a6f7-612f6c488a4a#/question/14 1/3 View Policies Show Attempt History (a) Fortini Corporation had record sales in 2023. It began 2023 with an Accounts Receivable balance of $475,000 and an Allowance for Expected Credit Losses of $33,000. Fortini recognized credit sales during the year of $6,675,000 and made monthly adjusting entries equal to 0.5% of each month’s credit sales to recognize the loss on impairment. Also during the year, the company wrote off $35,500 of accounts that were deemed to be uncollectible, although one customer whose $4,000 account had been written off surprised management by paying the amount in full in late September. Including this surprise receipt, $6,568,500 in cash was collected on account in 2023. To assess the reasonableness of the allowance for expected credit losses, the controller prepared the following aged listing of the receivables at December 31, 2023: Days Account Outstanding Amount Probability of Collection Less than 16 days $270,000 97% Between 16 and 30 days 117,000 92% Between 31 and 45 days 80,000 80% Between 46 and 60 days 38,000 70% Between 61 and 75 days 20,000 50% Over 75 days 25,000 0% $550,000 Your Answer Correct Answer (Used)  Your answer is correct. Reconcile the 2023 opening balance in Accounts Receivable to the $550,000 ending balance on the controller’s aged listing. Accounts Receivable Reconciliation Opening balance $ Credit sales in year Accounts written off Reinstatement of account collected Cash collected on account Ending balance $ 475000 6675000 -35500  4000 -6568500  550000

3/27/24, 6:59 PM Question 15 of 21 - Practice Chapter 7 https://education.wiley.com/was/ui/v2/assessment-player/index.html?launchId=842f49e4-6c91-4e70-a6f7-612f6c488a4a#/question/14 2/3 (b) (c) eTextbook and Media List of Accounts Attempts: unlimited Your Answer Correct Answer (Used)  Your answer is correct. Prepare the adjusting entry to bring the Allowance for Expected Credit Losses to its proper balance at year end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter "0" for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation Debit Credit Dec. 31 Loss on Impairment Allowance for Expected Credit Losses eTextbook and Media Solution List of Accounts Attempts: unlimited Your Answer Correct Answer (Used)  Your answer is correct. Show how Fortini would present accounts receivable on the December 31, 2023 statement of ±nancial position. Fortini Corporation Statement of ±nancial position (Partial) Accounts Receivable $ Less : Allowance for Expected Credit Losses Accounts Receivable (net) $ eTextbook and Media 44,985 44,985 550000 79,860  470,140

3/27/24, 6:59 PM Question 15 of 21 - Practice Chapter 7 https://education.wiley.com/was/ui/v2/assessment-player/index.html?launchId=842f49e4-6c91-4e70-a6f7-612f6c488a4a#/question/14 3/3 (d) List of Accounts Attempts: unlimited Your Answer Correct Answer (Used)  Your answer is correct. What is the dollar effect of the year-end loss on impairment adjustment on the before-tax income? The year-end loss on impairment adjustment would decrease before-tax income by $ eTextbook and Media Solution List of Accounts Attempts: unlimited 44,985

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