April Ltd. reported various selected balances in its 31 December 20X7 unadjusted trial balance: Accounts receivable $ 1,9 80,000 dr. Special accounts receivable 261,000 dr. Accounts receivable-U.S. 115,000 dr. Allowance for doubtful accounts 176,950 cr. Allowance for sales discounts 49,500 cr. The following transactions and events are noted: 1. An analysis of accounts receivable indicates that $980,000 are still in the discount period. An allowance of $98,000 is needed for sales discounts. 2. An analysis of accounts receivable indicated that $216,000 of accounts receivable should
Bad Debts
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.
![April Ltd. reported various selected balances in its 31 December 20X7 unadjusted trial balance: Accounts receivable $ 1,9
80,000 dr. Special accounts receivable 261,000 dr. Accounts receivable-U.S. 115,000 dr. Allowance for doubtful
accounts 176,950 cr. Allowance for sales discounts 49,500 cr. The following transactions and events are noted: 1. An
analysis of accounts receivable indicates that $980,000 are still in the discount period. An allowance of $98,000 is
needed for sales discounts. 2. An analysis of accounts receivable indicated that $216,000 of accounts receivable should
be written off. Of the remaining balance, 70% was current, and, after the allowance for sales discounts, approximately 5
% was deemed doubtful. Of the 30% noncurrent, 65% was doubtful. 3. The U.S. account receivable was recorded when
the exchange rate was $1.15. The exchange rate at year-end was $1.10. 4. The special account receivable was a single
account receivable from a customer with an excellent credit rating that was transferred to a financial institution at a
discount rate of 5% during the period. The cash collected from the financial institution was credited to an account called
"Miscellaneous credits." 5. Management has determined that this transaction was to be recorded as a sale/derecognition
but has not yet made the necessary entry. 6. The company has a note receivable that has not yet been recorded. The
note is a $98,000, three-year note that bears an interest rate of 5%. Interest is paid annually. The note was issued on 1
November 20X7 because of a sale. The market interest rate for accounts of this risk is 10%. Prepare the following journal
entries: 1. Record the Allowance for sales discounts. 2. Record the allowances for doubtful accounts. 3. Record the bad
debt expenses. 4. Record the entry for exchange loss. 5. Record the cash collected from financial institution was credited
to an account called "Miscellaneous credits."and at a discount rate of 5% during the period. 6. Record the notes
receivable of 98,000, three year note that bears interest rate of 5%. 7. Record the entry for interest receivable and
discount on notes receivable. Please use the present value tables to calculate as well. Please explain all numbers in detail
including basic information. Thank you very much in advance.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F99490794-8da5-43d1-ba1d-42cc8e97d5aa%2F7510a725-4aa1-4ddf-86f2-c777c1a7a634%2F19p03gd_processed.jpeg&w=3840&q=75)
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