Do Not Give Solution In Image Format And Fast Answering Please And Thanks In Advance ?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Do Not Give Solution In Image Format And Fast Answering Please And Thanks In Advance ?

Determining Bad Debt Expense Based on Aging Analysis (AP6-3)
Blue Skies Equipment Company uses the aging approach to estimate bad debt expense at the end of each
accounting year. Credit sales occur frequently on terms n/60. The balance of each account receivable
is aged on the basis of three time periods as follows: (1) not yet due, (2) up to one year past due, and
(3) more than one year past due. Experience has shown that for each age group, the average loss rate
on the amount of the receivable at year-end due to uncollectibility is (a) 3 percent, (b) 9 percent, and
(c) 28 percent, respectively.
At December 31, 2019 (end of the current accounting year), the Accounts Receivable balance was
$48,700 and the Allowance for Doubtful Accounts balance was $920 (credit). In determining which
P6-3
LO6-2
Transcribed Image Text:Determining Bad Debt Expense Based on Aging Analysis (AP6-3) Blue Skies Equipment Company uses the aging approach to estimate bad debt expense at the end of each accounting year. Credit sales occur frequently on terms n/60. The balance of each account receivable is aged on the basis of three time periods as follows: (1) not yet due, (2) up to one year past due, and (3) more than one year past due. Experience has shown that for each age group, the average loss rate on the amount of the receivable at year-end due to uncollectibility is (a) 3 percent, (b) 9 percent, and (c) 28 percent, respectively. At December 31, 2019 (end of the current accounting year), the Accounts Receivable balance was $48,700 and the Allowance for Doubtful Accounts balance was $920 (credit). In determining which P6-3 LO6-2
accounts have been paid, the company applies collections to the oldest sales first. To simplify, only five
customer accounts are used; the details of each on December 31, 2019, follow:
Date
Credit
3/11/2018
6/30/2018
1/31/2019
2/28/2019
4/15/2019
11/30/2019
11/30/2019
12/15/2019
3/2/2017
4/15/2017
9/1/2018
10/15/2018
2/1/2019
3/1/2019
12/31/2019
12/30/2019
Explanation
Sale
Collection
Collection
B. Brown-Account Receivable
Sale
Collection
Collection
D. Donalds-Account Receivable
Sale
Collection
Sale
Debit
Sale
Collection
13,000
N. Napler-Account Receivable
Sale
Collection
Sale
Collection
Sale
21,000
S. Strothers-Account Receivable
8,000
4,000
9,000
21,000
4,000
T. Thomas-Account Receivable
4,000
3.000
3,800
8.000
6,000
1,000
4.000
4,500
5,000
Balance
13,000
10,000
6,200
21,000
13,000
7,000
8,000
7,000
4,000
-0-
9,000
4,500
25,500
20,500
24,500
4,000
Required:
1. Compute the total accounts receivable in each age category..
2. Compute the estimated uncollectible amount for each age category and in total.
3. Give the adjusting entry for bad debt expense at December 31, 2019.
4. Show how the amounts related to accounts receivable should be presented on the 2019 income state-
ment and balance sheet.
Transcribed Image Text:accounts have been paid, the company applies collections to the oldest sales first. To simplify, only five customer accounts are used; the details of each on December 31, 2019, follow: Date Credit 3/11/2018 6/30/2018 1/31/2019 2/28/2019 4/15/2019 11/30/2019 11/30/2019 12/15/2019 3/2/2017 4/15/2017 9/1/2018 10/15/2018 2/1/2019 3/1/2019 12/31/2019 12/30/2019 Explanation Sale Collection Collection B. Brown-Account Receivable Sale Collection Collection D. Donalds-Account Receivable Sale Collection Sale Debit Sale Collection 13,000 N. Napler-Account Receivable Sale Collection Sale Collection Sale 21,000 S. Strothers-Account Receivable 8,000 4,000 9,000 21,000 4,000 T. Thomas-Account Receivable 4,000 3.000 3,800 8.000 6,000 1,000 4.000 4,500 5,000 Balance 13,000 10,000 6,200 21,000 13,000 7,000 8,000 7,000 4,000 -0- 9,000 4,500 25,500 20,500 24,500 4,000 Required: 1. Compute the total accounts receivable in each age category.. 2. Compute the estimated uncollectible amount for each age category and in total. 3. Give the adjusting entry for bad debt expense at December 31, 2019. 4. Show how the amounts related to accounts receivable should be presented on the 2019 income state- ment and balance sheet.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 1 images

Blurred answer
Knowledge Booster
Database design
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education