a. 12,600 b. 18,900 c. 19,200 d. 23,400 a. 123,300 b. 128,700 c. 143,300 d. 132,300 a. How much is the balance of the allowance for doubtful accounts on January 1, 20x1? b. How much is the adjusted bad debt expense to be reported in the year- end financial statements?
a. 12,600 b. 18,900 c. 19,200 d. 23,400 a. 123,300 b. 128,700 c. 143,300 d. 132,300 a. How much is the balance of the allowance for doubtful accounts on January 1, 20x1? b. How much is the adjusted bad debt expense to be reported in the year- end financial statements?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Transcribed Image Text:Use the following information for the next two questions:
ABC Co. has the following information on December 31, 20x1 before any year-end
adjustments.
Net credit sales
Accounts receivable, December
Allowance for doubtful accounts, Dec. 31 (before any
necessary year-end adjustments)
Percentage of credit sales
The aging of receivables is shown below:
Days outstanding
0 - 60
61 - 120
Over 120
Total accounts receivables
a. 12,600
b. 18,900
c. 19,200
d. 23,400
Receivable balances
378,000
283,500
315,000
976,500
a. 123,300
b. 128,700
c. 143,300
d. 132,300
6,300,000
976,500
53,550
2%
Additional information:
ABC Co. uses the percentage of credit sales in determining bad debts in monthly
financial reports and the aging of receivables for its annual financial statements.
Accounts written-off during the year amounted to P119,700 and accounts recovered
amounted to P28,350.
As of December 31, ABC Co. determined that P63,000 accounts receivable from a
certain customer included in the "61-120 days outstanding" group is 95% collectible
and a P31,500 account included in the "Over 120 days outstanding" group is worthless
and needs to be written-off.
% uncollectible
1%
2%
6%
a. How much is the balance of the allowance for doubtful accounts on
January 1, 20x1?
b. How much is the adjusted bad debt expense to be reported in the year-
end financial statements?
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