Allowance Method for Doubtful Accounts Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All-Natural prepared the following aging-of-receivables schedule as of the end of business on December 31, 20Y7: Days Past Due Customer Balance Not Past Due 1–30 31–60 61–90 91–120 Over 120 AAA Beauty 27,500 27,500 Amelia's Wigs 3,750 3,750 Zim’s Beauty 1,650 1,650 Totals 1,100,000 750,000 180,000 75,000 45,000 22,000 28,000 Averys All-Natural Company has a past history of uncollectible accounts by age category, as follows: Age Class Percent Uncollectible Not past due 1 % 1–30 days past due 3 31–60 days past due 7 61–90 days past due 16 91–120 days past due 40 Over 120 days past due 90 I ONLY WANT 4 - 5B ANSWERED NOT WHATS ON THE SNIPPET. 4. Assume that on March 4, 20Y8, Averys All-Natural wrote off the $2,950 account of Superior Images as uncollectible. Illustrate the effect on the accounts and financial statements of the write-off of the Superior Images account. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Statement of Cash Flows Balance Sheet Assets = Liabilities + Stockholders' Equity - = + 20Y8 Mar. 4 fill in the blank 30 fill in the blank 31 fill in the blank 32 fill in the blank 33 Statement of Cash Flows Income Statement fill in the blank 35 fill in the blank 37 5. Assume that on August 17, 20Y8, Superior Images paid $2,950 on its account. Illustrate the effect on the accounts and financial statements of reinstating and collecting the Superior Images account. (a) Reinstatement If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Statement of Cash Flows Balance Sheet Assets = Liabilities + Stockholders' Equity - = + 20Y8 Aug. 17 fill in the blank 42 fill in the blank 43 fill in the blank 44 fill in the blank 45 Statement of Cash Flows Income Statement fill in the blank 47 fill in the blank 49 (b) Collection If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Statement of Cash Flows Balance Sheet Assets = Liabilities + Stockholders' Equity + = + 20Y8 Aug. 17 fill in the blank 54 fill in the blank 55 fill in the blank 56 fill in the blank 57 Statement of Cash Flows Income Statement fill in the blank 59 fill in the blank 61

Allowance Method for Doubtful Accounts Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All-Natural prepared the following aging-of-receivables schedule as of the end of business on December 31, 20Y7: Days Past Due Customer Balance Not Past Due 1–30 31–60 61–90 91–120 Over 120 AAA Beauty 27,500 27,500 Amelia's Wigs 3,750 3,750 Zim’s Beauty 1,650 1,650 Totals 1,100,000 750,000 180,000 75,000 45,000 22,000 28,000 Averys All-Natural Company has a past history of uncollectible accounts by age category, as follows: Age Class Percent Uncollectible Not past due 1 % 1–30 days past due 3 31–60 days past due 7 61–90 days past due 16 91–120 days past due 40 Over 120 days past due 90 I ONLY WANT 4 - 5B ANSWERED NOT WHATS ON THE SNIPPET. 4. Assume that on March 4, 20Y8, Averys All-Natural wrote off the $2,950 account of Superior Images as uncollectible. Illustrate the effect on the accounts and financial statements of the write-off of the Superior Images account. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Statement of Cash Flows Balance Sheet Assets = Liabilities + Stockholders' Equity - = + 20Y8 Mar. 4 fill in the blank 30 fill in the blank 31 fill in the blank 32 fill in the blank 33 Statement of Cash Flows Income Statement fill in the blank 35 fill in the blank 37 5. Assume that on August 17, 20Y8, Superior Images paid $2,950 on its account. Illustrate the effect on the accounts and financial statements of reinstating and collecting the Superior Images account. (a) Reinstatement If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Statement of Cash Flows Balance Sheet Assets = Liabilities + Stockholders' Equity - = + 20Y8 Aug. 17 fill in the blank 42 fill in the blank 43 fill in the blank 44 fill in the blank 45 Statement of Cash Flows Income Statement fill in the blank 47 fill in the blank 49 (b) Collection If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts. Statement of Cash Flows Balance Sheet Assets = Liabilities + Stockholders' Equity + = + 20Y8 Aug. 17 fill in the blank 54 fill in the blank 55 fill in the blank 56 fill in the blank 57 Statement of Cash Flows Income Statement fill in the blank 59 fill in the blank 61

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Allowance Method for Doubtful Accounts

Averys All-Natural Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Averys All-Natural prepared the following aging-of-receivables schedule as of the end of business on December 31, 20Y7:

					Days Past Due
Customer	Balance	Not Past Due	1–30	31–60	61–90	91–120	Over 120
AAA Beauty	27,500		27,500
Amelia's Wigs	3,750					3,750
Zim’s Beauty	1,650				1,650
Totals	1,100,000		750,000		180,000	75,000	45,000	22,000	28,000

Averys All-Natural Company has a past history of uncollectible accounts by age category, as follows:

Age Class	Percent Uncollectible
Not past due		1	%
1–30 days past due		3
31–60 days past due		7
61–90 days past due		16
91–120 days past due		40
Over 120 days past due		90

I ONLY WANT 4 - 5B ANSWERED NOT WHATS ON THE SNIPPET.

4. Assume that on March 4, 20Y8, Averys All-Natural wrote off the $2,950 account of Superior Images as uncollectible. Illustrate the effect on the accounts and financial statements of the write-off of the Superior Images account.

If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Statement of Cash Flows	Balance Sheet
Assets	=	Liabilities	+	Stockholders' Equity
	-		=		+
20Y8 Mar. 4	fill in the blank 30		fill in the blank 31		fill in the blank 32	fill in the blank 33
Statement of Cash Flows		*Income Statement*
	fill in the blank 35			fill in the blank 37

5. Assume that on August 17, 20Y8, Superior Images paid $2,950 on its account. Illustrate the effect on the accounts and financial statements of reinstating and collecting the Superior Images account.

(a) Reinstatement

If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Statement of Cash Flows	Balance Sheet
Assets	=	Liabilities	+	Stockholders' Equity
	-		=		+
20Y8 Aug. 17	fill in the blank 42		fill in the blank 43		fill in the blank 44	fill in the blank 45
Statement of Cash Flows		*Income Statement*
	fill in the blank 47			fill in the blank 49

(b) Collection

If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

Statement of Cash Flows	Balance Sheet
Assets	=	Liabilities	+	Stockholders' Equity
	+		=		+
20Y8 Aug. 17	fill in the blank 54		fill in the blank 55		fill in the blank 56	fill in the blank 57
Statement of Cash Flows		*Income Statement*
	fill in the blank 59			fill in the blank 61

Instructions:
1. Estimate the allowance for doubtful accounts, based on the aging-of-receivables schedule.
59,350 V
2. Assume that the allowance for doubtful accounts for Averys All-Natural Company has a negative balance of $(2,250) before adjustment on December 31, 20Y7. Illustrate the effect on the accounts
uncollectible accounts.
If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.
Balance Sheet
Statement of
Assets
Liabilities
+
Stockholders' Equity
Cash Flows
Allowance for doubtful accounts V
No effect v
No effect v
Retained earnings v
+
+
20Y7 Dec. 31
57,100
-57,100
Statement of Cash Flows
Income Statement
No effect v
Bad debt expense v
57,100
3. Averys All-Natural Company reported credit sales of $2,400,000 during 20Y7. Assume that instead of using the analysis of receivables method of estimating uncollectible accounts, Natural Hair Com
estimates that 2.5% of sales will be uncollectible. Illustrate the effect on the accounts and financial statements of the adjustment for uncollectible accounts using the percent of sales method.
If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.
Balance Sheet
Statement of
Assets
Liabilities
+
Stockholders' Equity
Cash Flows
No effect v
No effect v
Retained earnings v
+
+
20Y7 Dec. 31
-60,000 v
-60,000
Statement of Cash Flows
Income Statement
No effect v
Bad debt expense v
-60,000 V

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