At the beginning of current year, ABC company reported that the allowance for doubtful account has a acredit balance of $170,000. The company uses the aging of accounts receivable as a way to estimate the allowance The following schedule was prepared: Not yet due $1,700,000 NL uncollectible 1-30 days pasat due $1,200,000 5% uncollectible 31-60 days past due $100,000 25% uncollectible 61-90 days past due $150,000 50% uncollectible over 90 days past due. $120,000 100% uncollectible Questions: 1) What is the required allowance for doubtful accounts at year-end? 2) How much would be the doubtful accounts expense for the current year? 3) What is the adjusting entry for the doubtful accounts expense for the current year? 4) What is the net realizable value of accounts receivable at year-end? 5) What is the effect on current assets should the adjustment was not made?
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.
At the beginning of current year, ABC company reported that the allowance for doubtful account has a acredit balance of $170,000. The company uses the aging of
The following schedule was prepared:
Not yet due $1,700,000 NL uncollectible
1-30 days pasat due $1,200,000 5% uncollectible
31-60 days past due $100,000 25% uncollectible
61-90 days past due $150,000 50% uncollectible
over 90 days past due. $120,000 100% uncollectible
Questions:
1) What is the required allowance for doubtful accounts at year-end?
2) How much would be the doubtful accounts expense for the current year?
3) What is the
4) What is the net realizable value of accounts receivable at year-end?
5) What is the effect on current assets should the adjustment was not made?
Step by step
Solved in 6 steps with 2 images
