BB Trading Ltd.used the allowance method to estimate impairment loss of receivable. An aging of account receivable revealed the following: Aging Group $. Estimated% Uncollectible 1-30 days old 65,000 1 30-60 days old 10,000. 15 more than 60 days old. 4000 40 Total Accounts Receivable. $79,000 A debt balance of $500was shown in the Allowance for Impairment on 31December 2015 immediately BEFORE the year-end adjustments a) Compute the balance that should be reported in the Allowance foe impairment at 31 December 2015. b)Prepare an adjusting entry on 31 December 2015 to recognize the impairment loss of receivable. Explanation of Journal Entry is not required. c) Determine the expected net realizable value of the accounts receivable as of 31 December 2015.
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.
BB Trading Ltd.used the allowance method to estimate impairment loss of receivable.
An aging of account receivable revealed the following:
Aging Group $. Estimated%
Uncollectible
1-30 days old 65,000 1
30-60 days old 10,000. 15
more than 60 days old. 4000 40
Total
A debt balance of $500was shown in the Allowance for Impairment on 31December 2015 immediately BEFORE the year-end adjustments
a) Compute the balance that should be reported in the Allowance foe impairment at 31 December 2015.
b)Prepare an
c) Determine the expected net realizable value of the accounts receivable as of 31 December 2015.
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