Chapter 8 Receivables A. Journalize the transactions under the direct write-off method. B. Journalize the transactions under the allowance method, assuming that the allowance aceON had a beginning balance of $36,000 at the beginning of the year and the company uses the analysis of receivables method. Rustic Tables Company prepared the following aging schedule for its accounts receivable: Receivables Balance on December 31 Estimated Percent of Uncollectible Accounts Aging Class (Number of Days Past Due) 0-30 days $320,000 1% 110,000 ET 3 31-60 days 61-90 days 91-120 days wolle bns o-e 24,000 10 18,000 33 75 43,000 $515,000 More than 120 days Total receivables C. How much higher (lower) would Rustic Tables' net income have been under the direct write-off method than under the allowance method? EX 8-15 Effect of doubtful accounts on net income Obj. 5 During its first year of operations, Mack's Plumbing Supply Co. had sales of $3,250,00. wrote off $27,800 of accounts as uncollectible using the direct write-off method, and le ported net income of $487,500. Determine what the net income would have been allowance method had been used and the company estimated that 1% of sales would be uncollectible. EX 8-16 Effect of doubtful accounts on net income Obj. 5 Using the data in Exercise 8-15, assume that during the second year of operations Mack's Plumbing Supply Co. had sales of $4,100.000, wrote off $34.000 of accounts as uncor ible using the direct write-off method, and reported net income of $600,000. A. Determine what net income would have been in the second year if the allowance method B. Determine what the balance of the allowance for doubtful accounts would have been at (using 1% of sales) had been used in both the first and second years. the end of the second year if the allowance method had h second vears both the first and
Chapter 8 Receivables A. Journalize the transactions under the direct write-off method. B. Journalize the transactions under the allowance method, assuming that the allowance aceON had a beginning balance of $36,000 at the beginning of the year and the company uses the analysis of receivables method. Rustic Tables Company prepared the following aging schedule for its accounts receivable: Receivables Balance on December 31 Estimated Percent of Uncollectible Accounts Aging Class (Number of Days Past Due) 0-30 days $320,000 1% 110,000 ET 3 31-60 days 61-90 days 91-120 days wolle bns o-e 24,000 10 18,000 33 75 43,000 $515,000 More than 120 days Total receivables C. How much higher (lower) would Rustic Tables' net income have been under the direct write-off method than under the allowance method? EX 8-15 Effect of doubtful accounts on net income Obj. 5 During its first year of operations, Mack's Plumbing Supply Co. had sales of $3,250,00. wrote off $27,800 of accounts as uncollectible using the direct write-off method, and le ported net income of $487,500. Determine what the net income would have been allowance method had been used and the company estimated that 1% of sales would be uncollectible. EX 8-16 Effect of doubtful accounts on net income Obj. 5 Using the data in Exercise 8-15, assume that during the second year of operations Mack's Plumbing Supply Co. had sales of $4,100.000, wrote off $34.000 of accounts as uncor ible using the direct write-off method, and reported net income of $600,000. A. Determine what net income would have been in the second year if the allowance method B. Determine what the balance of the allowance for doubtful accounts would have been at (using 1% of sales) had been used in both the first and second years. the end of the second year if the allowance method had h second vears both the first and
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.
Question
I need the unadjusted credit balance of the allowance account and adjustment.
Transcribed Image Text:Chapter 8 Receivables
A. Journalize the transactions under the direct write-off method.
B. Journalize the transactions under the allowance method, assuming that the allowance aceON
had a beginning balance of $36,000 at the beginning of the year and the company uses the
analysis of receivables method. Rustic Tables Company prepared the following aging schedule
for its accounts receivable:
Receivables Balance
on December 31
Estimated Percent of
Uncollectible Accounts
Aging Class (Number
of Days Past Due)
0-30 days
$320,000
1%
110,000
ET 3
31-60 days
61-90 days
91-120 days
wolle bns o-e
24,000
10
18,000
33
75
43,000
$515,000
More than 120 days
Total receivables
C. How much higher (lower) would Rustic Tables' net income have been under the direct
write-off method than under the allowance method?
EX 8-15 Effect of doubtful accounts on net income
Obj. 5
During its first year of operations, Mack's Plumbing Supply Co. had sales of $3,250,00.
wrote off $27,800 of accounts as uncollectible using the direct write-off method, and le
ported net income of $487,500. Determine what the net income would have been
allowance method had been used and the company estimated that 1% of sales would be
uncollectible.
EX 8-16 Effect of doubtful accounts on net income
Obj. 5
Using the data in Exercise 8-15, assume that during the second year of operations Mack's
Plumbing Supply Co. had sales of $4,100.000, wrote off $34.000 of accounts as uncor
ible using the direct write-off method, and reported net income of $600,000.
A. Determine what net income would have been in the second year if the allowance method
B. Determine what the balance of the allowance for doubtful accounts would have been at
(using 1% of sales) had been used in both the first and second years.
the end of the second year if the allowance method had h
second vears
both the first and
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