Age Group Accounts Receivable Estimated Loss % 0.5% Current (not past due) 1-30 days past due 31-60 days past due 61-120 days past due 121-180 days past due Over 180 days past due. $250,000 90,000 20,000 11,000 ..... 1 2 6,000 4,000 10 25 Total accounts receivable. $381,000 At the beginning of the fourth quarter of 2019, there was a credit balance of $4,350 in the Allowance for Uncollectible Accounts. During the fourth quarter, LaFond Company wrote off $3,830 in re- ceivables as uncollectible. a. What amount of bad debts expense will LaFond report for 2019? b. What is the balance of accounts receivable that it reports on its December 31, 2019, balance sheet? Set up T-accounts for both Bad Debts Expense and for the Allowance for Uncollectible Accounts. Enter any unadjusted balances along with the dollar effects of the information described (includ- ing your results from parts a and b). Explain the numbers in each of the T-accounts. d. Suppose LaFond wrote off $1,000 more in receivables in the quarter? Or, $1,000 less? How would that affect the bad debt expense for the fourth quarter? How does the aging of accounts deal with the inevitable differences between estimated cash collections and actual cash collections? C.
Age Group Accounts Receivable Estimated Loss % 0.5% Current (not past due) 1-30 days past due 31-60 days past due 61-120 days past due 121-180 days past due Over 180 days past due. $250,000 90,000 20,000 11,000 ..... 1 2 6,000 4,000 10 25 Total accounts receivable. $381,000 At the beginning of the fourth quarter of 2019, there was a credit balance of $4,350 in the Allowance for Uncollectible Accounts. During the fourth quarter, LaFond Company wrote off $3,830 in re- ceivables as uncollectible. a. What amount of bad debts expense will LaFond report for 2019? b. What is the balance of accounts receivable that it reports on its December 31, 2019, balance sheet? Set up T-accounts for both Bad Debts Expense and for the Allowance for Uncollectible Accounts. Enter any unadjusted balances along with the dollar effects of the information described (includ- ing your results from parts a and b). Explain the numbers in each of the T-accounts. d. Suppose LaFond wrote off $1,000 more in receivables in the quarter? Or, $1,000 less? How would that affect the bad debt expense for the fourth quarter? How does the aging of accounts deal with the inevitable differences between estimated cash collections and actual cash collections? C.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:LO4 E6-34. Reporting Uncollectible Accounts and Accounts Receivable
LaFond Company analyzes its accounts receivable at December 31, 2019, and arrives at the aged
categories below along with the percentages that are estimated as uncollectible.
MBC
Chapter 6 Reporting and Analyzing Revenues, Receivables, and Operating Income
31
Cambridge Business Publishers
Age Group
Accounts Receivable
Estimated Loss %
Current (not past due)
1-30 days past due
31-60 days past due
61-120 days past due
121-180 days past due
Over 180 days past due ..
$250,000
0.5%
...
90,000
20,000
2
11,000
6,000
10
4,000
25
Total accounts receivable...
$381,000
At the beginning of the fourth quarter of 2019, there was a credit balance of $4,350 in the Allowance
for Uncollectible Accounts. During the fourth quarter, LaFond Company wrote off $3,830 in re-
ceivables as uncollectible.
a. What amount of bad debts expense will LaFond report for 2019?
b. What is the balance of accounts receivable that it reports on its December 31, 2019, balance
sheet?
c. Set up T-accounts for both Bad Debts Expense and for the Allowance for Uncollectible Accounts.
Enter any unadjusted balances along with the dollar effects of the information described (includ-
ing your results from parts a and b). Explain the numbers in each of the T-accounts.
d. Suppose LaFond wrote off $1,000 more in receivables in the quarter? Or, $1,000 less? How
would that affect the bad debt expense for the fourth quarter? How does the aging of accounts deal
with the inevitable differences between estimated cash collections and actual cash collections?
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