Adjustment for Uncollectible Accounts Sun Valley Rides is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December 31, 20Y3, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows: Age Interval Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-180 days past due Over 180 days past due Balance $2,025,000 Dec. 31. 900,000 No effect 135,000 60,000 30,000 15,000 $3,165,000 Percent Uncollectible No effect 2% 1 7 19 Assume that the allowance for doubtful accounts for Sun Valley Rides had a negative balance of $(20,190) as of December 31, 20Y3. 52 Illustrate the effects of the adjustment for uncollectible accounts as of December 31, 20Y3, on the accounts and financial statements. 82 If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases, cash outflows, and the income statement effects that decrease net income as negative amounts. However, for contra asset accounts, enter account increases as a negative value. Financial Statement Effects Assets Balance Sheet Allowance for doubtful accounts Statement of Cash Flows Liabilities No effect + Stockholde ✓+Retained ear Income Statement Bad debt expense ✓
Adjustment for Uncollectible Accounts Sun Valley Rides is a wholesaler of motorcycle supplies. An aging of the company's accounts receivable on December 31, 20Y3, and a historical analysis of the percentage of uncollectible accounts in each age category are as follows: Age Interval Not past due 1-30 days past due 31-60 days past due 61-90 days past due 91-180 days past due Over 180 days past due Balance $2,025,000 Dec. 31. 900,000 No effect 135,000 60,000 30,000 15,000 $3,165,000 Percent Uncollectible No effect 2% 1 7 19 Assume that the allowance for doubtful accounts for Sun Valley Rides had a negative balance of $(20,190) as of December 31, 20Y3. 52 Illustrate the effects of the adjustment for uncollectible accounts as of December 31, 20Y3, on the accounts and financial statements. 82 If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases, cash outflows, and the income statement effects that decrease net income as negative amounts. However, for contra asset accounts, enter account increases as a negative value. Financial Statement Effects Assets Balance Sheet Allowance for doubtful accounts Statement of Cash Flows Liabilities No effect + Stockholde ✓+Retained ear Income Statement Bad debt expense ✓
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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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:Adjustment for Uncollectible Accounts
Sun Valley Rides is a wholesaler of motorcycle supplies. An aging of the company's
accounts receivable on December 31, 20Y3, and a historical analysis of the percentage
of uncollectible accounts in each age category are as follows:
Age Interval
Not past due
1-30 days past due
31-60 days past due
61-90 days past due
91-180 days past due
Over 180 days past due
Balance
$2,025,000
900,000
Dec. 31.
135,000
No effect ✓
60,000
30,000
15,000
$3,165,000
Financial Statement Effects
No effect
Percent Uncollectible
2%
1
Assume that the allowance for doubtful accounts for Sun Valley Rides had a negative
balance of $(20,190) as of December 31, 20Y3.
7
19
Illustrate the effects of the adjustment for uncollectible accounts as of December 31,
20Y3, on the accounts and financial statements.
52
If no account or activity is affected, select "No effect" from the dropdown list
and leave the corresponding number entry box blank. Enter account decreases,
cash outflows, and the income statement effects that decrease net income as
negative amounts. However, for contra asset accounts, enter account increases
as a negative value.
82
Assets
Balance Sheet
✓ Allowance for doubtful accounts
Statement of Cash Flows
Liabilities
No effect
Bad debt expense
+ Stockholders'
✓ + Retained earni
Income Statement
✓
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