From inception of operations to December 31, 2025, Swifty Corporation provided for uncollectible accounts receivable under the allowance method. The provisions are recorded, based on analyses of customers with different risk characteristics. Bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account, and no year-end adjustments to the allowance account were made. Swifty's usual credit terms are net 30 days. The balance in Allowance for Doubtful Accounts was $144,200 (Cr.) at January 1, 2025. During 2025, credit sales totaled $9,170,300, the provision for doubtful accounts was determined to be $183,406. $91,703 of bad debts were written off, and recoveries of accounts previously written off amounted to $19,570. Swifty installed a computer system in November 2025, and an aging of accounts receivable was prepared for the first time as of December 31, 2025. A summary of the aging is as follows. Classification by Month of Sale November-December 2025 July-October January-June Prior to 1/1/25 Balance in Each Category Estimated % Uncollectible $1,210,000 2% 688,300 11% 441,300 26% 157,300 85% $2,496.900 Based on the review of collectibility of the account balances in the "prior to 1/1/25" aging category, additional receivables totaling $57,500 were written off as of December 31, 2025. The 85% uncollectible estimate applies to the remaining $99,800 in the category. Effective with the year ended December 31. 2025, Swifty adopted a different method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable. Prepare a schedule analyzing the changes in Allowance for Doubtful Accounts for the year ended December 31, 2025. Show supporting computations in good form. (Hint: In computing the 12/31/25 allowance. subtract the $57,500 write-off.)
From inception of operations to December 31, 2025, Swifty Corporation provided for uncollectible accounts receivable under the allowance method. The provisions are recorded, based on analyses of customers with different risk characteristics. Bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account, and no year-end adjustments to the allowance account were made. Swifty's usual credit terms are net 30 days. The balance in Allowance for Doubtful Accounts was $144,200 (Cr.) at January 1, 2025. During 2025, credit sales totaled $9,170,300, the provision for doubtful accounts was determined to be $183,406. $91,703 of bad debts were written off, and recoveries of accounts previously written off amounted to $19,570. Swifty installed a computer system in November 2025, and an aging of accounts receivable was prepared for the first time as of December 31, 2025. A summary of the aging is as follows. Classification by Month of Sale November-December 2025 July-October January-June Prior to 1/1/25 Balance in Each Category Estimated % Uncollectible $1,210,000 2% 688,300 11% 441,300 26% 157,300 85% $2,496.900 Based on the review of collectibility of the account balances in the "prior to 1/1/25" aging category, additional receivables totaling $57,500 were written off as of December 31, 2025. The 85% uncollectible estimate applies to the remaining $99,800 in the category. Effective with the year ended December 31. 2025, Swifty adopted a different method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable. Prepare a schedule analyzing the changes in Allowance for Doubtful Accounts for the year ended December 31, 2025. Show supporting computations in good form. (Hint: In computing the 12/31/25 allowance. subtract the $57,500 write-off.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
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.
Question
Transcribed Image Text:From inception of operations to December 31, 2025, Swifty Corporation provided for uncollectible accounts receivable under the
allowance method. The provisions are recorded, based on analyses of customers with different risk characteristics. Bad debts written
off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account, and
no year-end adjustments to the allowance account were made. Swifty's usual credit terms are net 30 days.
The balance in Allowance for Doubtful Accounts was $144,200 (Cr.) at January 1, 2025. During 2025, credit sales totaled $9,170,300.
the provision for doubtful accounts was determined to be $183,406, $91,703 of bad debts were written off, and recoveries of
accounts previously written off amounted to $19,570. Swifty installed a computer system in November 2025, and an aging of
accounts receivable was prepared for the first time as of December 31, 2025. A summary of the aging is as follows.
Classification by
Month of Sale
November-December 2025
July-October
January-June
Prior to 1/1/25
Balance in
Each Category
Estimated %
Uncollectible
$1,210,000
2%
688.300
11%
441,300
26%
157,300
85%
$2,496,900
Based on the review of collectibility of the account balances in the "prior to 1/1/25" aging category, additional receivables totaling
$57,500 were written off as of December 31, 2025. The 85% uncollectible estimate applies to the remaining $99,800 in the category.
Effective with the year ended December 31, 2025, Swifty adopted a different method for estimating the allowance for doubtful
accounts at the amount indicated by the year-end aging analysis of accounts receivable.
Prepare a schedule analyzing the changes in Allowance for Doubtful Accounts for the year ended December 31, 2025. Show
supporting computations in good form. (Hint: In computing the 12/31/25 allowance. subtract the $57.500 write-off.)
SWIFTY CORPORATION
Analysis of Changes in the
Allowance for Doubtful Accounts
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