At January 1, 2023, the credit balance of Blue Spruce Corp's Allowance for Expected Credit Losses was $411,000. During 2023, the loss on impairment entry was based on a percentage of net credit sales. Net sales for 2023 were $79 million, of which 89% were on account. Based on the information available at the time, the 2023 loss on impairment was estimated to be 0.80% of net credit sales. During 2023, uncollectible receivables amounting to $481,000 were written off against the allowance for expected credit losses. The company has estimated that at December 31, 2023, based on a review of the aged accounts receivable, the allowance for expected credit losses would be properly measured at $526,500. (a1) Your answer is partially correct. Prepare a schedule calculating the balance in Blue's Allowance for Expected Credit Losses at December 31, 2023. Balance, January 1, 2023 Loss on impairment accrual Uncollectible receivables written off Balance, December 31, 2023 before adjustment Allowance adjustment Balance, December 31, 2023 411000 632000 1043000 481000 i 562000 35500 526500
At January 1, 2023, the credit balance of Blue Spruce Corp's Allowance for Expected Credit Losses was $411,000. During 2023, the loss on impairment entry was based on a percentage of net credit sales. Net sales for 2023 were $79 million, of which 89% were on account. Based on the information available at the time, the 2023 loss on impairment was estimated to be 0.80% of net credit sales. During 2023, uncollectible receivables amounting to $481,000 were written off against the allowance for expected credit losses. The company has estimated that at December 31, 2023, based on a review of the aged accounts receivable, the allowance for expected credit losses would be properly measured at $526,500. (a1) Your answer is partially correct. Prepare a schedule calculating the balance in Blue's Allowance for Expected Credit Losses at December 31, 2023. Balance, January 1, 2023 Loss on impairment accrual Uncollectible receivables written off Balance, December 31, 2023 before adjustment Allowance adjustment Balance, December 31, 2023 411000 632000 1043000 481000 i 562000 35500 526500
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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Transcribed Image Text:At January 1, 2023, the credit balance of Blue Spruce Corp's Allowance for Expected Credit Losses was $411,000. During 2023, the
loss on impairment entry was based on a percentage of net credit sales. Net sales for 2023 were $79 million, of which 89% were on
account. Based on the information available at the time, the 2023 loss on impairment was estimated to be 0.80% of net credit sales.
During 2023, uncollectible receivables amounting to $481,000 were written off against the allowance for expected credit losses. The
company has estimated that at December 31, 2023, based on a review of the aged accounts receivable, the allowance for expected
credit losses would be properly measured at $526,500.
(a1)
- Your answer is partially correct.
Prepare a schedule calculating the balance in Blue's Allowance for Expected Credit Losses at December 31, 2023.
Balance, January 1, 2023
Loss on impairment accrual
Uncollectible receivables written off
Balance, December 31, 2023 before adjustment
Allowance adjustment
Balance, December 31, 2023
SA
$
411000
632000
1043000
481000 i
562000
35500
526500
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