Estimating Uncollectible Accounts and Reporting Accounts Receivable LaFond Company analyzes its accounts receivable at December 31, and arrives at the age categories below along with the percentages that are estimated as uncollectible. Age Group 0-30 days past due 31-60 days past due 61-120 days past due 121-180 Accounts Estimated Receivable Loss % $ 90,000 2% 4 10 20 50 20,000 11,000 6,000 Over 180 days past due 4,000 Total accounts receivable $ 131,000 The balance of the allowance for uncollectible accounts is $1,040 on December 31, before any adjustments. (a) What amount of bad debts expense will LaFond report in its income statement for the year? $ (b) Use the financial statement effects template to record LaFond's bad debts expense for the year. Use negative signs with your answers, when appropriate. Transaction Record bad debt expense Cash Asset + Noncash Assets Balance Sheet = Liabilities + Contributed Capital (c) What is the balance of accounts receivable on it December 31 balance sheet? $ + Earned Capital Revenue Income Statement Expenses Net Income
Estimating Uncollectible Accounts and Reporting Accounts Receivable LaFond Company analyzes its accounts receivable at December 31, and arrives at the age categories below along with the percentages that are estimated as uncollectible. Age Group 0-30 days past due 31-60 days past due 61-120 days past due 121-180 Accounts Estimated Receivable Loss % $ 90,000 2% 4 10 20 50 20,000 11,000 6,000 Over 180 days past due 4,000 Total accounts receivable $ 131,000 The balance of the allowance for uncollectible accounts is $1,040 on December 31, before any adjustments. (a) What amount of bad debts expense will LaFond report in its income statement for the year? $ (b) Use the financial statement effects template to record LaFond's bad debts expense for the year. Use negative signs with your answers, when appropriate. Transaction Record bad debt expense Cash Asset + Noncash Assets Balance Sheet = Liabilities + Contributed Capital (c) What is the balance of accounts receivable on it December 31 balance sheet? $ + Earned Capital Revenue Income Statement Expenses Net Income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Bad Debts
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.
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Transcribed Image Text:Estimating Uncollectible Accounts and Reporting Accounts Receivable
LaFond Company analyzes its accounts receivable at December 31, and arrives at the age categories below along with the percentages that are estimated as uncollectible.
Age Group
0-30 days past due
31-60 days past due
61-120 days past due
121-180
Accounts
Receivable
$ 90,000
20,000
11,000
6,000
4,000
Over 180 days past due
Total accounts receivable $ 131,000
Estimated
Loss %
2%
4
10
20
50
The balance of the allowance for uncollectible accounts is $1,040 on December 31, before any adjustments.
(a) What amount of bad debts expense will La Fond report in its income statement for the year?
$
Transaction
Record bad debt expense
(b) Use the financial statement effects template to record LaFond's bad debts expense for the year.
Use negative signs with your answers, when appropriate.
Cash Asset +
Noncash
Assets
Balance Sheet
Contributed
= Liabilities + Capital
(c) What is the balance of accounts receivable on it December 31 balance sheet?
$
Earned
+ Capital
Revenue
Income Statement
Expenses = Net Income
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