Maxwell Inc. analyzed its accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible: % Considered Age Group Balance Uncollectible 0-30 days past due $100,000 1% 31-60 days past due 18,000 3% 61-120 days past due 20,000 6% 121-180 days past due 7,000 10% Over 180 days past due 2,000 20% $147,000 The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $840 on December 31, before any adjustments. a. Determine the amount of the adjustment for estimated credit losses on December 31. $Answer b. Determine the financial statement effect of a write off of Porter Company’s account on the following May 12, in the amount of $480. Use negative signs with answers, when appropriate. If a transaction increases and decreases the same Balance Sheet category, enter the increase amount in the first row and the decrease amount directly below (in the second row). Balance Sheet Income Statement Stockholders' Assets = Liabilities + Equity Revenues - Expenses = Net Income
Maxwell Inc. analyzed its accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible: % Considered Age Group Balance Uncollectible 0-30 days past due $100,000 1% 31-60 days past due 18,000 3% 61-120 days past due 20,000 6% 121-180 days past due 7,000 10% Over 180 days past due 2,000 20% $147,000 The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $840 on December 31, before any adjustments. a. Determine the amount of the adjustment for estimated credit losses on December 31. $Answer b. Determine the financial statement effect of a write off of Porter Company’s account on the following May 12, in the amount of $480. Use negative signs with answers, when appropriate. If a transaction increases and decreases the same Balance Sheet category, enter the increase amount in the first row and the decrease amount directly below (in the second row). Balance Sheet Income Statement Stockholders' Assets = Liabilities + Equity Revenues - Expenses = Net Income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Maxwell Inc. analyzed its
| % Considered | ||
|---|---|---|
| Age Group | Balance | Uncollectible |
| 0-30 days past due | $100,000 | 1% |
| 31-60 days past due | 18,000 | 3% |
| 61-120 days past due | 20,000 | 6% |
| 121-180 days past due | 7,000 | 10% |
| Over 180 days past due | 2,000 | 20% |
| $147,000 |
The company handles credit losses using the allowance method.
The credit balance of the Allowance for Doubtful Accounts is $840 on December 31, before any adjustments.
a. Determine the amount of the adjustment for estimated credit losses on December 31.
$Answer
b. Determine the financial statement effect of a write off of Porter Company’s account on the following May 12, in the amount of $480.
Use negative signs with answers, when appropriate.
If a transaction increases and decreases the same
| Balance Sheet | Income Statement | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Stockholders' | ||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | - | Expenses | = | Net Income | |||
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