Imagine Corporation prepares an aging schedule for its accounts receivable at the end of each month and records bad debts expense monthly. The following selected information is from Imagine's partial aging schedule at the end of August: Number of Days Outstanding 0-30 days 31-60 days 61-90 days Over 90 days Total Accounts. Receivable $280,000 90,000 45,000 18,000 $433,000 Estimated Percentage Uncollectible 1% 3% 10% 15% The unadjusted balance in Allowance for Doubtful Accounts is a debit of $4,300. Instructions (a) Complete the aging schedule and calculate the total estimated uncollectible accounts from the abov information. Search documents and file (b) 1. Prepare the adjusting journal entry to record the bad debts for the month using the information determined in part (a). 2. Would your journal entry be different if the unadjusted balance in Allowance for Doubtful Accounts were a credit of $4,300? (c) In September, management determined that $4,200 of the outstanding receivables were uncollectible. Prepare the journal entry to write off the uncollectible amount. (d) Imagine Corporation subsequently collected $2,300 of the $4,200 that was determined to be uncollectible in part (c). Prepare the journal entry(ies) to record the collection.
Imagine Corporation prepares an aging schedule for its accounts receivable at the end of each month and records bad debts expense monthly. The following selected information is from Imagine's partial aging schedule at the end of August: Number of Days Outstanding 0-30 days 31-60 days 61-90 days Over 90 days Total Accounts. Receivable $280,000 90,000 45,000 18,000 $433,000 Estimated Percentage Uncollectible 1% 3% 10% 15% The unadjusted balance in Allowance for Doubtful Accounts is a debit of $4,300. Instructions (a) Complete the aging schedule and calculate the total estimated uncollectible accounts from the abov information. Search documents and file (b) 1. Prepare the adjusting journal entry to record the bad debts for the month using the information determined in part (a). 2. Would your journal entry be different if the unadjusted balance in Allowance for Doubtful Accounts were a credit of $4,300? (c) In September, management determined that $4,200 of the outstanding receivables were uncollectible. Prepare the journal entry to write off the uncollectible amount. (d) Imagine Corporation subsequently collected $2,300 of the $4,200 that was determined to be uncollectible in part (c). Prepare the journal entry(ies) to record the collection.
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:Imagine Corporation prepares an aging schedule for its accounts receivable at the end of each
month and records bad debts expense monthly. The following selected information is from
Imagine's partial aging schedule at the end of August:
Number of Days
Outstanding
0-30 days
31-60 days
61-90 days
Over 90 days
Total
Accounts
Receivable
$280,000
90,000
45,000
18,000
$433,000
Estimated Percentage
Uncollectible
1%
3%
10%
15%
The unadjusted balance in Allowance for Doubtful Accounts is a debit of $4,300.
Instructions
(a) Complete the aging schedule and calculate the total estimated uncollectible accounts from the
above information.
Search documents and file n
(b) 1. Prepare the adjusting journal entry to record the bad debts for the month using the
information determined in part (a).
2. Would your journal entry be different if the unadjusted balance in Allowance for Doubtful
Accounts were a credit of $4,300?
(c) In September, management determined that $4,200 of the outstanding receivables were
uncollectible. Prepare the journal entry to write off the uncollectible amount.
(d) Imagine Corporation subsequently collected $2,300 of the $4,200 that was determined to be
uncollectible in part (c). Prepare the journal entry(ies) to record the collection.
Transcribed Image Text:On May 31, O'Hearne Limited had a cash balance per books of $13,126. The bank statement from
Community Bank on that date showed a balance of $15,230. A comparison of the bank statement
with the company's Cash account revealed the following:
1. The bank statement included a bank service charge of $80.
2. The bank statement included electronic collections totalling $4,188. These were not
previously recorded.
3. Outstanding cheques at April 30 totalled $2,900. Of these, $2,240 worth cleared the bank
in May. There were $1,892 of cheques written in May that were still outstanding on May
31.
4. Included with the cancelled cheques was a cheque issued by O'Bearne Inc. for $1,200 that
was incorrectly charged to O'Hearne by the bank.
5. On May 31, the bank statement showed a returned (NSF) cheque for $1,350 issued by a
customer in payment of its account. In addition, the bank charged an $80 processing fee
for this transaction.
6. The May 31 deposit of $1,926 was not included in the deposits on the May bank statement.
The deposit had been placed in the bank's night deposit vault on May 31.
Instructions
(a) Prepare the bank reconciliation at May 31.
(b) Prepare any journal entries required from the reconciliation.
Part II. Prepare aging schedule and record bad debts (P8-4B)
Imagine Corporation prepares an aging schedule for its accounts receivable at the end of each
month and records bad debts expense monthly. The following selected information is from
Imagine's partial aging schedule at the end of August:
Number of Days
Outstanding
Accounts
Receivable
Estimated Percentage
Uncollectible
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