Adjusting Allowance for Doubtful Accounts and Bad Debt Expense Merck & Company reported the following in its financial statements. $ millions Accounts receivable, net Allowance for doubtful accounts 2016 2017 2018 2019 $8,773 $8,591 $8,839 $8,473 244 199 149 108 Adjust the balance sheet and income statement to reflect a 1.97874% of Allowance for doubtful accounts to Gross accounts receivables for each year. Assume a tax rate of 20%. • Round answers to one decimal. • Use a negative sign to indicate if the adjustment decreases an account balance. 2016 2017 2018 2019 Adjusted allowance for doubtful accts. $ 178.4 $ 173.9 $ 177.8 $ 169.8 Income Statement Adjustments Bad debts expense Income tax expense at 20% Net Income (65.6) (25.1) 28.8 61.8 (13.1) (5) 5.8 12.4 52.5 20.1 (23.1) (49.4) Balance Sheet Adjustments Allowance for doubtful accounts (65.6) (90.6) (61.8) 0 Accounts receivable, net 65.6 90.6 61.8 0 Deferred tax liabilities 13.1 18.1 12.4 0 Retained Earnings 52.5 72.5 49.4 0

Adjusting Allowance for Doubtful Accounts and Bad Debt Expense Merck & Company reported the following in its financial statements. $ millions Accounts receivable, net Allowance for doubtful accounts 2016 2017 2018 2019 $8,773 $8,591 $8,839 $8,473 244 199 149 108 Adjust the balance sheet and income statement to reflect a 1.97874% of Allowance for doubtful accounts to Gross accounts receivables for each year. Assume a tax rate of 20%. • Round answers to one decimal. • Use a negative sign to indicate if the adjustment decreases an account balance. 2016 2017 2018 2019 Adjusted allowance for doubtful accts. $ 178.4 $ 173.9 $ 177.8 $ 169.8 Income Statement Adjustments Bad debts expense Income tax expense at 20% Net Income (65.6) (25.1) 28.8 61.8 (13.1) (5) 5.8 12.4 52.5 20.1 (23.1) (49.4) Balance Sheet Adjustments Allowance for doubtful accounts (65.6) (90.6) (61.8) 0 Accounts receivable, net 65.6 90.6 61.8 0 Deferred tax liabilities 13.1 18.1 12.4 0 Retained Earnings 52.5 72.5 49.4 0

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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Jars Plus recorded $861,430 in credit sales for the year and $488,000 in accounts receivable. The uncollectible percentage is 2.3% for the income statement method, and 3.6% for the balance sheet method. Record the year-end adjusting entry for 2018 bad debt using the income statement method. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $10,220, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $5,470, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Estimating and Recording Bad Debt Estimates and Write-offs; Reporting of Accounts Receivable At December 31, 2020, its annual year-end, the accounts of Sun Systems Inc. show the following. 1. Sales revenue for 2020, $468,000, of which one-sixth was on account. 2. Allowance for doubtful accounts, balance December 31, 2019, $2,340 credit. 3. Accounts receivable, balance December 31, 2020 (prior to any write-offs of uncollectible accounts during 2020), $46,930. 4. Uncollectible accounts to be written off, December 31, 2020, $2,730. 5. Aging schedule at December 31, 2020, showing the following breakdown of total accounts receivable, excluding amounts to be written off. Status Amount Not past due Remainder Past due 1–60 days $10,400 Past due over 60 days 7,800 Required a. Prepare the 2020 entry to write off the uncollectible accounts. b. Prepare the 2020 adjusting entry to record bad debt expense for each of the following separate assumptions concerning expected bad…
Zebra Company reported the following for 2022: Credit sales = $419884 Accounts Receivable = $16376 Allowance for Doubtful Accounts = $291 (credit balance) Bad Debt is estimated at 0.31 of 1% of sales After the adjusting entry is recorded, what is the value of Allowance for Doubtful Accounts? ROUND TO THE NEAREST DOLLAR
Carter & Evans reported the following rounded amounts (in millions): 2019 $ 5,435 (305) $ 5,130 $ 40,500 2018 $ 5,140 (310) $ 4,830 $ 39,000 Accounts Receivable Allowance for Doubtful Accounts Accounts Receivable, Net of Allowance Net Sales (assume all on credit) Required: 1. Determine the receivables turnover ratio and days to collect for 2019. 2. Do the measures calculated in requirement 1 represent an improvement (or deterioration) in receivables turnover, compared to 2018, when the turnover was 9.5?
Jars Plus recorded $862,430 in credit sales for the year and $489,000 in accounts receivable. The uncollectible percentage is 2.3% for the income statement method, and 3.0% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $10,220, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $5,470, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. If an amount box does not require an entry, leave it blank. If required, round final answers to two decimal places. A. Dec. 31 Bad Debt Expense 88 88 88 38 88 88 Allowance for…
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Adjusting Allowance for Doubtful Accounts and Bad Debt Expense Merck & Company reported the following in its financial statements. $ millions Accounts receivable, net Allowance for doubtful accounts 2016 2017 2018 2019 $8,773 $8,591 $8,839 $8,473 244 199 149 108 Adjust the balance sheet and income statement to reflect a 1.97874% of Allowance for doubtful accounts to Gross accounts receivables for each year. Assume a tax rate of 20%. • Round answers to one decimal. • Use a negative sign to indicate if the adjustment decreases an account balance. 2016 2017 2018 2019 Adjusted allowance for doubtful accts. $ $ $ $ Income Statement Adjustments Bad debts expense Income tax expense at 20% Net Income Balance Sheet Adjustments Allowance for doubtful accounts Accounts receivable, net Deferred tax liabilities Retained Earnings
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The following information has been extracted from the annual reports of Lilydale Ltd and Monbulk Ltd. Lilydale Ltd Monbulk Ltd $2 950 300 17 100 Sales (net credit) revenue for year Allowance for Doubtful Debts, 1/7/18 Allowance for Doubtful Debts, 30/6/19 Accounts receivable (gross) 1/7/18 Accounts receivable (gross) 30/6/19 $2 204 300 27 100 19780 28 100 722 650 368 000 485 800 384 200 (a) Calculate the receivables turnover ratio and average collection period for both companies. Comment on the difference in their collection experiences. (b) Compare the success or otherwise of their cash collection policies, given that the average receivables turnover for the industry in which the companies operated is 7. Credit terms for both companies are 2/10, n/30.
The annual report for Fabeck Finishing Corporation contained the following information: (in millions) Accounts Receivable Allowance for Doubtful Accounts Accounts Receivable, Net 2021 $673 32 $641 Assume that accounts receivable write-offs amounted to $13 during 2021 and $3 during 2020, and that Fabeck Finishing did not record any recoveries. Bad Debt Expense 2020 $735 31 $704 Required: Determine the Bad Debt Expense for 2021 based on the above facts. (Enter your answer in millions.) million
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Edsel Inc. has the following unadjusted year end trial balance information available for 2018: Credit sales Ending accounts receivable balance. Ending allowance for uncollectibles Estimated uncollectibles Multiple Choice If Edsel uses the gross accounts receivable approach for estimating the bad debt provision, the allowance for uncollectibles account, afte accounts are recorded, should show a balance of. O $2,600 O $3,600 $600,000 $180,000 $1,500 O $5,600 2%