Question No 4: Moonglow, a Broadway Publicity firm, uses the balance sheet approach toestimate uncollectible accounts expense. At year-end an aging of the accounts receivableproduced the following classification:Not yet due.1-30 days past due.31-60 days past due.61-90 days past due.Over 90 days past due$400,000150,00060,00020,00050,000S680.000Total.On the basis of past experience, the company estimated the percentages probably uncollectiblefor the above five age groups to be as follows: Group 1, 1%; Group 2, 4%; Group 3, 10%; Group4, 25%; and Group 5, 40%The Allowance for Doubtful Accounts before adjustments at December 31 showed a creditbalance of $6,600.Instructionsa. Compute the estimated amount of uncollectible accounts based on the aboveclassification by age groups.b. Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to theproper amount. Show T- account calculation.c. Assume that on January 15 of the following year, Moonglow learned that an accountreceivable that had originated on September 1 in the amount of $2,400 was worthlessbecause of the bankruptcy of the client, May Flowers. Prepare the journal entryrequired on January 15 to write off this account.

Solution a: Computation of Allowance for Uncollectible Accounts Ageing Accounts Receivables %…

Answered: 50,000 $680.000 .... .... d the…

Business

Accounting

50,000 $680.000 .... .... d the percentages probably uncollect

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Starlight, a Broadway media firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end an aging of the accounts receivable produced the following classification: Not yet due.... $500,000 1-30 days past due... 110,000 31-60 days past due.. 50,000 61-90 days past due.. 30,000 Over 90 days past due.. 60,000 Total.. $750,000 On the basis of past experience, the company estimated the percentages probably uncollectible for the above five age groups to be as follows: Group 1, 1%; Group 2, 3%; Group 3, 10%; Group 4, 20%; and Group 5, 50%. The Allowance for Doubtful Accounts before adjustments at December 31 showed a credit balance of $4,700. What is the estimated amount of uncollectible accounts based on the above classification by age groups and the amount of the adjustment needed to bring the Allowance for Doubtful Accounts to the proper amount? A. $49,300 and $44,600 B. $44,600 and $4,700 C. $52,300 and $44,600 D. $49,300 and $54,000
Suppose the balance in the Allowance for Doubtful Accounts at the end of year is a $400 Debit balance before adjustment. The company estimates future uncollectible accounts to be $3,200. At what amount would Bad Debt Expense be reported in the current year's income statement? A. $400 B. $2,800 C. $3,600 D. $3,200
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bad debt expense?
Tantrum Company provided the following information in relation to accounts receivable at year-end: Days outstanding estimated amount %uncollectible www M 1% 1,200,000 900,000 0-60 61-120 2% 1,000,000 3,100,000\ During the current year, the entity wrote off P70,000 in accounts receivable and recovered P20,000 that had been written off in prior years. At the beginning of current year, the allowance for uncollectible accounts was Over 120 6% P60,000. Under the aging method, what amount of uncollectible accounts expense should be reported for the current year?
Starlight, a Broadway media firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end an aging of the accounts receivable produced the following classification: Not yet due.. $500,000 1-30 days past due. 110,000 31-60 days past due. 50,000 61-90 days past due.. 30,000 Over 90 days past due.. 60,000 Total. $750,000 On the basis of past experience, the company estimated the percentages probably uncollectible for the above five age groups to be as follows: Group 1, 1%, Group 2, 3%, Group 3, 10%; Group 4, 20%; and Group 5, 50%. The Allowance for Doubtful Accounts before adjustments at December 31 showed a credit balance of $4,700. Vhat is the estimated amount of uncollectible accounts based on the above classification by age groups and the amount of the adjustment needed to bring the Allowance or Doubtful Accounts to the proper amount? DA. $44,600 and $4,700 O B. $49,300 and $44,600 O C. $49,300 and $54,000 O D. $52,300 and $44,600 tionale:
(c) What is the balance of accounts receivable on it December 31 balance sheet? Estimating Uncollectible Accounts and Reporting Accounts ReceivableLaFond Company analyzes its accounts receivable at December 31, and arrives at the age categories below along with the percentages that are estimated as uncollectible. Age Group Accounts Receivable Estimated Loss % 0-30 days past due $ 180,000 1% 31-60 days past due 40,000 2 61-120 days past due 22,000 5 121-180 12,000 10 Over 180 days past due 8,000 25 Total accounts receivable $ 262,000
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Analysis of Receivables Method At the end of the current year, Accounts Receivable has a balance of $2,450,000, Allowance for Doubtful Accounts has a credit balance of $14,860, and sales for the year total $31,600,000. Using the aging method, the balance of Allowance for Doubtful Accounts is estimated as $250,000. a. Determine the amount of the adjusting entry for uncollectible accounts.$ b. Determine the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. Accounts Receivable $ Allowance for Doubtful Accounts $ Bad Debt Expense $ c. Determine the net realizable value of accounts receivable.$
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