# Chapter 8 - Receivables## Aging Schedule for Receivables:| Days Past Due | Amount | Percentage (%) ||-----------------------|----------|----------------|| 31-60 days past due | 190,000 | 5 || 61-90 days past due | 60,000 | 15 || 91-180 days past due | 36,000 | 40 || Over 180 days past due| 24,000 | 80 || **Total** | **2,060,000** | |- **Objective:** Estimate the proper balance of the allowance for doubtful accounts as of December 31, 2019.Selby's Bike Co. has determined the proper balance for the Allowance for Doubtful Accounts at December 31 is $76,475. Assume that the allowance for doubtful accounts for Selby's Bike Co. had a debit balance of $7,200 as of December 31, 2019.---### General Journal| Date | Description | Post Ref | Debit | Credit ||------|-------------|----------|-------|--------|| 1 | | | | || 2 | | | | |---## Reinstated a Written-off Account1. **Reinstate the Receivable:** - **Receive the Cash Against It.** - **Reason:** For control purposes, the person who receives and records Cash Receipts is not the person with authority to write off receivables. Likely a manager is reinstating the receivable and the Cash Receipts clerk is recording the cash receipt.**Fred sends us a check for $700**### Step 1: The Account Must Be Reinstated#### General Journal| Date | Description | Post Ref | Debit | Credit ||------|-------------|----------|-------|--------|| 1 | | | | || 2 | | | | |### Step 2: The Cash Received Is Recorded#### General Journal| Date | Description | Post Ref | Debit | Credit ||------|-------------|----------|-------|--------|| 1 | | | | || 2 | | | | |*Page 4* ## Chapter 5 - Receivables### Uncollectible Accounts AdjustmentThe Allowance balance is a $200 credit before adjustment. Uncollectible accounts are estimated to be $2,000.#### Adjusting Entry to Record Uncollectible Accounts**General Journal**| Date | Description | Post ref | Debit | Credit ||------|-------------|----------|-------|--------|| 1 | | | | || 2 | | | | |---If the Allowance balance started with a $200 debit balance and uncollectible accounts are estimated to be $2,000, the adjusting entry to record uncollectible accounts is shown below.**General Journal**| Date | Description | Post ref | Debit | Credit ||------|-------------|----------|-------|--------|| 1 | | | | || 2 | | | | |### Note:The Bad Debt Expense estimate in the prior year was incorrect, but not an error. It was a good faith estimate, and the apparent violation of the matching principle is allowed under GAAP.### End of Year Accounts ReceivableAt the end of the current year, the accounts receivable account has a debit balance of $1,400,000, and total sales are $15,350,000. You need to determine the amount of the adjustment needed:a. The allowance account before adjustment has a debit balance of $23,000. Bad debt expense is estimated at 3/4 of 1% of sales.b. The allowance account before adjustment has a debit balance of $23,000. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $125,000.c. The allowance account before adjustment has a credit balance of $14,500. Bad debt expense is estimated at 1/2 of 1% of sales.d. The allowance account before adjustment has a credit balance of $14,500. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $180,000.---### Case Study: Selby's Bike Co.Selby’s Bike Co. is a wholesaler of motorcycle supplies. An aging of the company’s accounts receivable on December 31, 2019, and a historical analysis of the percentage of uncollectible accounts in each age category are observed as follows:| Age Interval

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Chapter 8 -Receivables 31-60 days past due 61-90 days past due 91-180 days past due Over 180 days past due 2 190,000 60,000 36,000 24,000 $2,060,000 Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31, 2019. Date Selby's Bike Co. has determined that the proper balance for the Allowance for Doubtful Accounts at December 31 is $76,475. Assume that the allowance for doubtful accounts for Selby's Bike Co. had a debit balance of $7,200 as of December 31, 2019. а GENERAL JOURNAL Description 5 15 40 80 Post ref Debit Page Credit 12

Chapter 8 -Receivables 31-60 days past due 61-90 days past due 91-180 days past due Over 180 days past due 2 190,000 60,000 36,000 24,000 $2,060,000 Estimate what the proper balance of the allowance for doubtful accounts should be as of December 31, 2019. Date Selby's Bike Co. has determined that the proper balance for the Allowance for Doubtful Accounts at December 31 is $76,475. Assume that the allowance for doubtful accounts for Selby's Bike Co. had a debit balance of $7,200 as of December 31, 2019. а GENERAL JOURNAL Description 5 15 40 80 Post ref Debit Page Credit 12

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Problem 3 On January 1,2020, Jamin Company had a credit balance of P260,000 in the allowance for uncollectible accounts. Based on past experience, 2% of credit sales would be uncollectible. During the year, the entity wrote off P325,000 of uncollectible accounts. Credit sales for the year were P9,000,000. On December 31,2020, what amount should be reported as allowance for uncollectible accounts?
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41 Tesla estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts receivable. During 2024, Tesla's credit sales and collections were $121,000 and $131,000, respectively. What was the balance of accounts receivable on January 1, 2024, if $120 in accounts receivable were written off during 2024 and if the allowance account had a balance of $960 on December 31, 2024? Multiple Choice O $42,120 O $31,000 $420 None of these answer choices are correct.
Suzuki Supply reports the following amounts at the end of 2024 (before adjustment). Credit Sales for 2024 Accounts Receivable, December 31, 2024 Allowance for Uncollectible Accounts, December 31, 2024 $248,000 43,000 1,000 (debit) Required: 1. Record the adjusting entry for uncollectible accounts using the percentage-of-receivables method. Suzuki estimates 10% of receivables will not be collected. 2. Record the adjusting entry for uncollectible accounts using the percentage-of-credit-sales method. Suzuki estimates 2% of credit sales will not be collected. 3. Calculate the effect on net income (before taxes) and total assets in 2024 for each method.
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Percentage of Credit Sales Method At December 31, 2018, Garneau has a $10,000 credit balance in its allowance for doubtful accounts. Garneau estimates that 3% of its 2018 credit sales will eventually default. During 2018, Garneau had credit sales of $1,324,400. Required: Estimate the bad debt expense under the percentage of credit sales method.$
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Question 8 Dreadful Behaviour Ltd has credit sales of $400,000 in 2022 and a debit balance of $1,900 in the Allowance for Doubtful Accounts at year end. As of December 31, 2022, $120,000 of accounts receivable remain uncollected. The credit manager of Dangle prepared an aging schedule of accounts abnor receivable and estimates that $4,800 will prove to be uncollectible. On March 3, 2023 the credit manager authorizes a write-off of the $1,000 balance owed by D. Taylor. On April 1, 2023 Mr. Taylor pays his account in full and also pays Dangle $75 interest on his account Required (a) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2022. (b) Show the statement of financial position presentation of accounts receivable on December 31, 2022. (c) On March 3, 2023 before the write-off, assume the balance of Accounts Receivable account is $160,000 and the balance of Allowance for Doubtful Accounts is a credit of $3,000. Make the appropriate entry to record…
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