Credit Losses Based on Accounts Receivable Aging Maxwell Inc., analyzed its accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible: % Considered Age Group Balance Uncollectible 0-30 days past due $300,000 1% 31-60 days past due 54,000 3% 61-120 days past due 60,000 6% 121-180 days past due 21,000 10% Over 180 days past due 6,000 20% $441,000 The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $2,520 on December 31, before any adjustments. a. Determine the amount of the adjustment for estimated credit losses on December 31. $ 0 b. Determine the financial statement effect of a write off of Porter Company's account on the following May 12, in the amount of $1,440. Use negative signs with answers, when appropriate. If a transaction increases and decreases the same Balance Sheet category, enter the increase amount in the first row and the decrease amount directly below (in the second row). Balance Sheet Income Statement Stockholders' Assets Liabilities Equity Revenues Expenses = Net Income
Credit Losses Based on Accounts Receivable Aging Maxwell Inc., analyzed its accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible: % Considered Age Group Balance Uncollectible 0-30 days past due $300,000 1% 31-60 days past due 54,000 3% 61-120 days past due 60,000 6% 121-180 days past due 21,000 10% Over 180 days past due 6,000 20% $441,000 The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $2,520 on December 31, before any adjustments. a. Determine the amount of the adjustment for estimated credit losses on December 31. $ 0 b. Determine the financial statement effect of a write off of Porter Company's account on the following May 12, in the amount of $1,440. Use negative signs with answers, when appropriate. If a transaction increases and decreases the same Balance Sheet category, enter the increase amount in the first row and the decrease amount directly below (in the second row). Balance Sheet Income Statement Stockholders' Assets Liabilities Equity Revenues Expenses = Net Income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Credit Losses Based on Accounts Receivable Aging
Maxwell Inc., analyzed its accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible:
% Considered
Age Group
Balance Uncollectible
0-30 days past due
$300,000
1%
31-60 days past due
54,000
3%
61-120 days past due
60,000
6%
121-180 days past due
21,000
10%
Over 180 days past due
6,000
20%
$441,000
The company handles credit losses using the allowance method.
The credit balance of the Allowance for Doubtful Accounts is $2,520 on December 31, before any adjustments.
a. Determine the amount of the adjustment for estimated credit losses on December 31.
$ 0
b. Determine the financial statement effect of a write off of Porter Company's account on the following May 12, in the amount of $1,440.
Use negative signs with answers, when appropriate.
If a transaction increases and decreases the same Balance Sheet category, enter the increase amount in the first row and the decrease amount directly below (in the second row).
Balance Sheet
Income Statement
Stockholders'
Assets
Liabilities
Equity
Revenues
Expenses
= Net Income
+](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F11ff9f03-4cfd-4604-9eab-3af23331f424%2F88cda5d1-acba-4735-8b92-569e2a3844b5%2Fdahrsnc_processed.png&w=3840&q=75)
Transcribed Image Text:Credit Losses Based on Accounts Receivable Aging
Maxwell Inc., analyzed its accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible:
% Considered
Age Group
Balance Uncollectible
0-30 days past due
$300,000
1%
31-60 days past due
54,000
3%
61-120 days past due
60,000
6%
121-180 days past due
21,000
10%
Over 180 days past due
6,000
20%
$441,000
The company handles credit losses using the allowance method.
The credit balance of the Allowance for Doubtful Accounts is $2,520 on December 31, before any adjustments.
a. Determine the amount of the adjustment for estimated credit losses on December 31.
$ 0
b. Determine the financial statement effect of a write off of Porter Company's account on the following May 12, in the amount of $1,440.
Use negative signs with answers, when appropriate.
If a transaction increases and decreases the same Balance Sheet category, enter the increase amount in the first row and the decrease amount directly below (in the second row).
Balance Sheet
Income Statement
Stockholders'
Assets
Liabilities
Equity
Revenues
Expenses
= Net Income
+
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