Gandolph Company is a small business with a bookkeeper that uses the direct write off method for handling bad debts during the year. It only produces annual financial statements and hires an accounting firm at year end to come in and make the necessary accrual entries required to produce GAAP financials to satisfy its bank loan covenants. Before adjustments the ending balance of Accounts Receivables is $19,257. During the year it wrote off three accounts for $355, $350 and $505 that were due for more than 600 days. At year end the professional accountants decided that additional receivables of $423 will become uncollectible. Required 1: Assuming no other transaction happened, what is the Bad Debt Expense reported in the annual Income Statement? $ Required 2: Assuming no other transaction happened, what is the adjusted balance of Accounts Receivables at year end? $ Required 3: Assuming no other transaction happened, by how much was last year Net Income overstated because the Allowance method was not used? $

Gandolph Company is a small business with a bookkeeper that uses the direct write off method for handling bad debts during the year. It only produces annual financial statements and hires an accounting firm at year end to come in and make the necessary accrual entries required to produce GAAP financials to satisfy its bank loan covenants. Before adjustments the ending balance of Accounts Receivables is $19,257. During the year it wrote off three accounts for $355, $350 and $505 that were due for more than 600 days. At year end the professional accountants decided that additional receivables of $423 will become uncollectible. Required 1: Assuming no other transaction happened, what is the Bad Debt Expense reported in the annual Income Statement? $ Required 2: Assuming no other transaction happened, what is the adjusted balance of Accounts Receivables at year end? $ Required 3: Assuming no other transaction happened, by how much was last year Net Income overstated because the Allowance method was not used? $

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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