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

FINANCIAL ACCOUNTING
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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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.
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