Allowance Method On March 10, Gardner, Inc. declared a $900 account receivable from the Gates Company as uncollectible and wrote off the account. On November 18, Gardner received a $400 payment on the account from Gates. a. Assume that Gardner uses the allowance method of handling credit losses. What are the adjustments to record the write-off and the subsequent recovery of Gates's account? Use negative signs with answers, when appropriate. If a transaction increases and decreases the same Balance Sheet category, enter the increase amount in the first row and the decrease amount directly below (in the second row). Balance Sheet Income Statement Transaction Write-off the account Reinstate the account to the extent of recovery Record the subsequent recovery Assets = Liabilities Stockholders' Equity Revenues - Expenses = Net Income b. Assume that the payment from Gates arrives on February 5 of the following year rather than on November 18 of the current year. Is there any difference in the overall financial statement impact? +
Allowance Method On March 10, Gardner, Inc. declared a $900 account receivable from the Gates Company as uncollectible and wrote off the account. On November 18, Gardner received a $400 payment on the account from Gates. a. Assume that Gardner uses the allowance method of handling credit losses. What are the adjustments to record the write-off and the subsequent recovery of Gates's account? Use negative signs with answers, when appropriate. If a transaction increases and decreases the same Balance Sheet category, enter the increase amount in the first row and the decrease amount directly below (in the second row). Balance Sheet Income Statement Transaction Write-off the account Reinstate the account to the extent of recovery Record the subsequent recovery Assets = Liabilities Stockholders' Equity Revenues - Expenses = Net Income b. Assume that the payment from Gates arrives on February 5 of the following year rather than on November 18 of the current year. Is there any difference in the overall financial statement impact? +
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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D7.
Account
Transcribed Image Text:Allowance Method
On March 10, Gardner, Inc. declared a $900 account receivable from the Gates Company as uncollectible and wrote off the account.
On November 18, Gardner received a $400 payment on the account from Gates.
a. Assume that Gardner uses the allowance method of handling credit losses. What are the adjustments to record the write-off and the subsequent recovery of Gates's account?
Use negative signs with answers, when appropriate.
If a transaction increases and decreases the same Balance Sheet category, enter the increase amount in the first row and the decrease amount directly below (in the second row).
Balance Sheet
Income Statement
Transaction
Write-off the account.
Reinstate the account to the extent of recovery
Record the subsequent recovery
Assets = Liabilities +
Stockholders'
Equity
Revenues
- Expenses = Net Income
b. Assume that the payment from Gates arrives on February 5 of the following year rather than on November 18 of the current year.
Is there any difference in the overall financial statement impact?
♦
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