A review of the company's provision for uncollectible accounts during 2023 resulted in a determination that 1.5% of sales is the appropriate amount of loss on impairment to be charged to operations, rather than the 2% used for the preceding two years. Loss on impairment recognized in 2022 and 2021 was $33,200 and $15,300, respectively. The company would have recorded $18,000 of loss on impairment under the old rate for 2023. No entry has yet been made in 2023 for loss on impairment

A review of the company's provision for uncollectible accounts during 2023 resulted in a determination that 1.5% of sales is the appropriate amount of loss on impairment to be charged to operations, rather than the 2% used for the preceding two years. Loss on impairment recognized in 2022 and 2021 was $33,200 and $15,300, respectively. The company would have recorded $18,000 of loss on impairment under the old rate for 2023. No entry has yet been made in 2023 for loss on impairment

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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Vaughn, Inc. had net sales in 2025 of $1,470,100. At December 31, 2025, before adjusting entries, the balances in selected accounts were Accounts Receivable $313,900 debit, and Allowance for Doubtful Accounts $1,814 debit. Assume that 11% of accounts receivable will prove to be uncollectible. Prepare the entry to record bad debt expense. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry.) Date Account Titles and Explanation Dec. 31, 2025 Debit Credit
Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2023 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $37,000 During 2024, credit sales were $1,785,000, cash collections from customers $1,865,000, and $42,000 in accounts receivable were written off. In addition, $3,700 was collected from a customer whose account was written off in 2023. An aging of accounts receivable at December 31, 2024, reveals the following: Age Group 0-60 days 61-90 days 91-120 days Over 120 days Percentage of Year- End Receivables in Group 60% 10 20 10 $ 467,000 Percent Uncollectible 38 5 25 45 Required: 1. Prepare summary journal entries to account for the 2024 write-offs and the collection of the receivable previously written off. 2. Prepare the year-end adjusting entry for bad debts according to each of the…
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