At December 31, 2021, before any year-end adjustments, the Accounts Receivable balance of TM Manufacture, Inc., is $380,000. The Allowance for Uncollectible Accounts has a(n) $25,400 credit balance. TM Manufacture prepares the following aging schedule for Accounts Receivable: (Click the icon to view the aging schedule.) Read the requirements. Requirement 1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowance account adequate? Too high? Too low? First, calculate a revised allowance for uncollectible accounts amount and the adjusting entry amount. (Round to the nearest dollar.) Allowance for Uncollectible Accounts: Credit balance needed 1-30 31-60 61-90 Over 90 Subtotal Less: Unadjusted balance Adjusting entry amount $ 600 5,500 5,600 20,000 $ 31,700 (25,400) $ 6,300 The credit balance at December 31 in Allowance for Uncollectible Accounts should be Thus, the current balance of the allowance account is too low. $ 31,700. The current balance is Data table Total Balance $380,000 Estimated uncollectible 1-30 Days $150,000 0.4% Print Age of Accounts 31-60 Days 61-90 Days $110,000 $80,000 5.0 % 7.0% Done Over 90 Days $40,000 50.0 %
At December 31, 2021, before any year-end adjustments, the Accounts Receivable balance of TM Manufacture, Inc., is $380,000. The Allowance for Uncollectible Accounts has a(n) $25,400 credit balance. TM Manufacture prepares the following aging schedule for Accounts Receivable: (Click the icon to view the aging schedule.) Read the requirements. Requirement 1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowance account adequate? Too high? Too low? First, calculate a revised allowance for uncollectible accounts amount and the adjusting entry amount. (Round to the nearest dollar.) Allowance for Uncollectible Accounts: Credit balance needed 1-30 31-60 61-90 Over 90 Subtotal Less: Unadjusted balance Adjusting entry amount $ 600 5,500 5,600 20,000 $ 31,700 (25,400) $ 6,300 The credit balance at December 31 in Allowance for Uncollectible Accounts should be Thus, the current balance of the allowance account is too low. $ 31,700. The current balance is Data table Total Balance $380,000 Estimated uncollectible 1-30 Days $150,000 0.4% Print Age of Accounts 31-60 Days 61-90 Days $110,000 $80,000 5.0 % 7.0% Done Over 90 Days $40,000 50.0 %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Question
3
Transcribed Image Text:At December 31, 2021, before any year-end adjustments, the Accounts Receivable balance of TM Manufacture, Inc., is $380,000. The Allowance for Uncollectible Accounts has a(n) $25,400 credit balance. TM Manufacture prepares the following aging
schedule for Accounts Receivable:
(Click the icon to view the aging schedule.)
Read the requirements.
Requirement 1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowance account adequate? Too high? Too low?
First, calculate a revised allowance for uncollectible accounts amount and the adjusting entry amount. (Round to the nearest dollar.)
Allowance for Uncollectible Accounts:
Credit balance needed
1-30
31-60
61-90
Over 90
Subtotal
Less: Unadjusted balance
Adjusting entry amount
$
600
5,500
5,600
20,000
$ 31,700
(25,400)
$ 6,300
The credit balance at December 31 in Allowance for Uncollectible Accounts should be
Thus, the current balance of the allowance account is
too low.
$ 31,700. The current balance is
Data table
Total Balance
$380,000
Estimated uncollectible
1-30 Days
$150,000
0.4 %
Print
Age of Accounts
31-60 Days
61-90 Days
$110,000
$80,000
5.0 %
7.0%
Done
Over 90 Days
$40,000
50.0 %
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education