Grover Incorporated uses the allowance method to account for uncollectible accounts expense. Grover Incorporated experienced the following four accounting events in Year 1: 1. Recognized $71,000 of revenue on account. 2. Collected $65,000 cash from accounts receivable. 3. Wrote off uncollectible accounts of $650. 4. Recognized uncollectible accounts expense. Grover estimated that uncollectible accounts expense will be 2 percent of sales on account. Required a. Show the effect of each event on the elements of the financial statements, using a horizontal statements model. Use + for increase, for decrease, and blank for not affected. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), financing activity (FA), or not affected (blank). The first transaction is entered as an example. b. Record the previous transactions in general journal form.

Grover Incorporated uses the allowance method to account for uncollectible accounts expense. Grover Incorporated experienced the following four accounting events in Year 1: 1. Recognized $71,000 of revenue on account. 2. Collected $65,000 cash from accounts receivable. 3. Wrote off uncollectible accounts of $650. 4. Recognized uncollectible accounts expense. Grover estimated that uncollectible accounts expense will be 2 percent of sales on account. Required a. Show the effect of each event on the elements of the financial statements, using a horizontal statements model. Use + for increase, for decrease, and blank for not affected. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), financing activity (FA), or not affected (blank). The first transaction is entered as an example. b. Record the previous transactions in general journal form.

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter16: Financial Statements And Closing Entries For A Corporation

Section: Chapter Questions

Problem 5AP

See similar textbooks

Related questions

Q: On December 31, Year 3, Alpha Company had an ending balance of $400,000 in its accounts receivable…

A: The allowance for doubtful accounts is created to record estimated bad debt expense for the period.…

Q: Barga Company's net sales for Year 1 and Year 2 are $663,000 and $749,000, respectively. Its…

A: Days Sales Uncollected measures how long, on average, it takes for a company to collect payments…

Q: 1. AB Company has a debit balance of $4500 in Allowance for Doubtful Accounts. At year end the…

A: Allowance for doubtful debt: The allowance for doubtful accounts is a contra asset account that is…

Q: The Miller Company earned $190,000 of revenue on account during Year 1. There was no beginning…

A: INCOME STATEMENT Income statement is one of the important financial statements of the Company.…

Q: On January 1, Year 2, Grande Company had a $71,000 balance in the Accounts Receivable account and a…

A: Uncollectible Account:- These are those accounts that are not going to be received by the company…

Q: Alan uses the income statement approach in estimating uncollectible accounts expense, and…

A: Amount of credit sales = Total sales * (1-Cash sales%) = 900000*(1-20%) =720000

Q: A company is getting ready to publish their annual financial statements. They have the following…

A: Income statement of providing allowance for doubtful accounts estimates allowance on the basis of…

Q: At the end of the current year, Accounts Receivable has a balance of $878,070; Allowance for…

A: Account receivable means the amount due from customer whom we sold the goods on credit. Allowance…

Q: On January 1, Year 2, Grande Company had a $76,000 balance in the Accounts Receivable account and a…

A: When a company is unable to collect money owed to them, it incurs an expense known as "Estimated…

Q: net realizable value

A: Net realizable value refers to asset which could be realized when asset is sold.

Q: Question 1. Accounts Recievable has a debit balance of $3,400, and the allowance for uncollectiable…

A: The allowance for uncollectiable accounts is created to record estimated bad debt expense for the…

Q: At the beginning of Year 3 Randall Company had a $16,070 balance in its accounts receivable account…

Q: During the first year of operation, Year 1, Direct Service Company recognized $304,000 of service…

A: The bad debt expense is related to uncollectible accounts receivable. When a company makes sales on…

Q: A. Suzie estimates uncollectible accounts to be 10% of accounts receivable (which does not include…

A: Accounts Receivables - Accounts Receivables are the amount unpaid by the customer for the service…

Q: At the beginning of Year 3 Randall Company had a $10400 balance in its accounts receivable account…

A: The allowance for doubtful accounts is created to record estimated bad debt expense for the period.…

Q: Blimp Company uses the allowance method to account for uncollectible receivables. At the beginning…

A: The allowance for the doubtful debt is a type of contra asset. The allowance for doubtful debts is a…

Q: At the end of the current year, Accounts Receivable has a balance of $717,190; Allowance for…

Q: punts. During Year 1, Miller collected $83,000 of cash from its receivables accounts. The company…

A: When a business projects that a particular portion of its outstanding accounts receivable—that is,…

Q: At the end of the current year, Accounts Receivable has a balance of $108,290; Allowance for…

A: Account receivable means the amount due from customer whom we sold the goods on credit. Allowance…

Q: At the end of the current year, Accounts Receivable has a balance of $195,120; Allowance for…

A: Answer 1) Adjusting Entry for bad debts expense Account Titles and Explanation Debit Credit…

Q: Present the journal entry necessary to record each of the following items; assuming King Company…

A: The journal keeps the record for day to day transactions of the business on regular basis The…

Q: At the end of the current year, Accounts Receivable has a balance of $94,790; Allowance for Doubtful…

A: Solution a: Sales 1099000 *% of sales (1%) 1.00% Amount of Adjusting entry 10990

Q: Before adjusting for uncollectible accounts, Minderman Company has accounts receivable of $90,000…

A: The correct answer is Option (C).

Q: Allegheny Company ended Year 1 with balances in Accounts Receivable and Allowance for Doubtful…

Q: K Blended Corporation uses the allowance method to account for uncollectible receivables. At the…

A: The objective of the question is to calculate the year-end balance in the Allowance for Bad Debts…

Q: Banning Company uses the allowance method to account for uncolectible receivables At the beginning…

A: The allowance for doubtful accounts is created to record the estimated bad debt expense for the…

Q: At the end of the current year, Accounts Receivable has a balance of $128,310; Allowance for…

Q: Allegheny Company ended Year 1 with balances in Accounts Receivable and Allowance for Doubtful…

A: Uncollectible Accounts Expense = Ending Allowance for Doubtful Accounts balance - Beginning…

Q: At the end of the current year, Accounts Receivable has a balance of $675,000; Allowance for…

A: Allowance method is referring to record expected bad debts that can be generated from credit revenue…

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

Grover Incorporated uses the allowance method to account for uncollectible accounts expense. Grover Incorporated experienced the
following four accounting events in Year 1:
1. Recognized $71,000 of revenue on account.
2. Collected $65,000 cash from accounts receivable.
3. Wrote off uncollectible accounts of $650.
4. Recognized uncollectible accounts expense. Grover estimated that uncollectible accounts expense will be 2 percent of sales on
account.
Required
a. Show the effect of each event on the elements of the financial statements, using a horizontal statements model. Use + for increase,
- for decrease, and blank for not affected. In the Statement of Cash Flows column, indicate whether the item is an operating activity
(OA), investing activity (IA), financing activity (FA), or not affected (blank). The first transaction is entered as an example.
b. Record the previous transactions in general journal form.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction of Horizontal & Statement Model

VIEW

Step 2: Requirement (a) presentation of Horizontal Statement model

VIEW

Step 3: Journal entry

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

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

Last year, Nikkola Company had net sales of 2.299.500,000 and cost of goods sold of 1,755,000,000. Nikkola had the following balances: Refer to the information for Nikkola Company above. Required: Note: Round answers to one decimal place. 1. Calculate the average accounts receivable. 2. Calculate the accounts receivable turnover ratio. 3. Calculate the accounts receivable turnover in days.
Jars Plus recorded $861,430 in credit sales for the year and $488,000 in accounts receivable. The uncollectible percentage is 2.3% for the income statement method, and 3.6% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $10,220, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $5,470, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
At the end of 20-3, Martel Co. had 410,000 in Accounts Receivable and a credit balance of 300 in Allowance for Doubtful Accounts. Martel has now been in business for three years and wants to base its estimate of uncollectible accounts on its own experience. Assume that Martel Co.s adjusting entry for uncollectible accounts on December 31, 20-2, was a debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts of 25,000. (a) Estimate Martels uncollectible accounts percentage based on its actual bad debt experience during the past two years. (b) Prepare the adjusting entry on December 31, 20-3, for Martel Co.s uncollectible accounts.
Bristax Corporation recorded $1,385,660 in credit sales for the year, and $732,410 in accounts receivable. The uncollectible percentage is 3.1% for the income statement method and 4.5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $20,550; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $17,430; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Tonis Tech Shop has total credit sales for the year of 170,000 and estimates that 3% of its credit sales will be uncollectible. Allowance for Doubtful Accounts has a credit balance of 275. Prepare the adjusting entry at year-end for the estimated bad debt expense. (a) Based on an aging of its accounts receivable, Kyles Cyclery estimates that 3,200 of its year-end accounts receivable will be uncollectible. Allowance for Doubtful Accounts has a debit balance of 280 at year-end. Prepare the adjusting entry at year-end for the estimated uncollectible accounts.
Determining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto Parts had an accounts receivable balance of $31,800 and a balance in the allowance for doubtful accounts of $2,980 (credit). During the year, Tennyson had credit sales of $624,300, collected accounts receivable in the amount of $602,700, wrote off $18,600 of accounts receivable, and had the following data for accounts receivable at the end of the period: Required: 1. Determine the desired post adjustment balance in allowance for doubtful accounts. 2. Determine the balance in allowance for doubtful accounts before the bad debt expense adjusting entry is posted. 3. Compute bad debt expense. 4. Prepare the adjusting entry to record bad debt expense.
Ink Records recorded $2,333,898 in credit sales for the year and $1,466,990 in accounts receivable. The uncollectible percentage is 3% for the income statement method and 5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $20,254; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Olena Mirrors records bad debt using the allowance, balance sheet method. They recorded $343,160 in accounts receivable for the year and $577,930 in credit sales. The uncollectible percentage is 4.4%. On June 11, Olena Mirrors identifies one uncollectible account from Nadia White in the amount of $4,265. On September 14, Nadia Chernoff unexpectedly pays $1,732 toward her account. Record journal entries for the following. A. Year-end adjusting entry for 2017 bad debt B. June 11, 2018 identification entry C. Entry for payment on September 14, 2018
Vaibhav
am.111.
During the first year of operation, Year 1, Direct Service Company recognized $304,000 of service revenue on account. At the end of Year 1, the accounts receivable balance was $59,759. For this first year in business, the owner believes uncollectible accounts expense will be about 7 percent of sales on account. Required a. What amount of cash did Direct Service collect from accounts receivable during Year 1? b. Assuming Direct Service uses the allowance method to account for uncollectible accounts, what amount should Direct Service record as uncollectible accounts expense for Year 1? c. Prepare the general journal entries to: (1) Record service revenue on account. (2) Record collections from accounts receivable. (3) Record the entry to recognize uncollectible accounts expense. d. What is the net realizable value of receivables at the end of Year 1? e. Show the effects of the transactions in Requirement c on the financial statements by recording the appropriate amounts in a horizontal…
Present the journal entry necessary to record each of the following items; assuming King Company uses the Allowance method of accounting for Uncollectible Accounts (Bad Debts). 1. Uncollectible Accounts Expense for the year is estimated to be 6% of Net Sales. Net Sales for the year are $100,000 and the Allowance account has a $600 credit balance 2. A $20,000 note is received from a customer on account. 3. The $800 balance in an individual customer's account is written off as uncollectible. 4. The company received $200 from a customer whose account had been previously written off as uncollectible. 5