HW-4 Bad debts SMC operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in SMC's Accounts Receivable account was $555,000 and Allowance for Doubtful Accounts had a debit balance of $3,000. Sales for the year were $2,000,000. The company uses the aging schedule shown below. The company policy is to write-off recievables when the probability of collection reaches zero. Days Account Outstanding Less than 16 days Between 16 and 30 days Between 31 and 45 days Between 46 and 60 days Between 61 and 75 days Over 75 days Total Amount $ 300,000 100,000 80,000 40,000 20,000 15,000 Probability of Collection Computations 0.98 0.90 0.85 0.80 0.55 0 Instructions (a) What is the balance for Allowance for Doubtful Accounts at year-end? (b) Show how accounts receivable would be presented on the balance sheet. (c) What is the amount recorded for bad debt expense for the year?

HW-4 Bad debts SMC operates in an industry that has a high rate of bad debts. Before any year-end adjustments, the balance in SMC's Accounts Receivable account was $555,000 and Allowance for Doubtful Accounts had a debit balance of $3,000. Sales for the year were $2,000,000. The company uses the aging schedule shown below. The company policy is to write-off recievables when the probability of collection reaches zero. Days Account Outstanding Less than 16 days Between 16 and 30 days Between 31 and 45 days Between 46 and 60 days Between 61 and 75 days Over 75 days Total Amount $ 300,000 100,000 80,000 40,000 20,000 15,000 Probability of Collection Computations 0.98 0.90 0.85 0.80 0.55 0 Instructions (a) What is the balance for Allowance for Doubtful Accounts at year-end? (b) Show how accounts receivable would be presented on the balance sheet. (c) What is the amount recorded for bad debt expense for the year?

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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Exercise 228 (Part Level Submission) The percentage of receivables approach to estimating bad debts expense is used by Oriole Company. On February 28 (the fiscal yearend), the firm had accounts receivable in the amount of $573,000 and Allowance for Doubtful Accounts had a credit balance of $1,850 before adjustment. Net credit sales for February amounted to $3,480,000. The credit manager estimated that uncollectible accounts would amount to 6% of accounts receivable. On March 10, an accounts receivable from Mark Dole for $2,100 was determined to be uncollectible and written off. However, on March 31, Dole received an inheritance and immediately paid his past due account in full. (a) Prepare the journal entries made by Oriole Company on the below dates: (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) 1. February 28 2. March 10 3. March 31 Date Account Titles and…
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An aging of a company's accounts receivable indicates that $9700 is estimated to be uncollectible. If Allowance for Doubtful Accounts has a $3010 balance, the adjustment to record bad debts for the period will require a(n)
Wohoo Publishers uses the allowance method to estimate uncollectible accounts receivables. The company produced the following aging of the accounts receivable at year-end (Y in thousands). Accounts receivable % uncollectible Estimated bad debts Total 200,000 0-30 days 77,000 2% 31-60 days 46,000 5% 61-90 days 91-120 days 39,000 6% 23,000 10% Over 120 days 15,000 25%
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