Mobile Technology Ltd. reported an unadjusted balance of accounts receivable of $1,380,000 at 31 December 20X3, along with a credit balance in the allowance for doubtful accounts of $85,000 and an allowance for sales discounts of $7,900. At year-end, the company determined that an allowance of $21,000 for sales discounts was needed. It also decided that $57,200 of accounts receivable were uncollectible and should be written off. Of the remaining receivables, it was determined that 30% were current, and of the remaining net current balance, an allowance for doubtful accounts of 4% of the net balance was needed. The remaining 70% of outstanding accounts receivable were past due and an allowance for doubtful accounts of 10% of the outstanding balance was needed. For each of the above show how net accounts receivable would be reported on the statement of financial position and calculate bad debt expense for the year.
Mobile Technology Ltd. reported an unadjusted balance of accounts receivable of $1,380,000 at 31 December 20X3, along with a credit balance in the allowance for doubtful accounts of $85,000 and an allowance for sales discounts of $7,900. At year-end, the company determined that an allowance of $21,000 for sales discounts was needed. It also decided that $57,200 of accounts receivable were uncollectible and should be written off. Of the remaining receivables, it was determined that 30% were current, and of the remaining net current balance, an allowance for doubtful accounts of 4% of the net balance was needed. The remaining 70% of outstanding accounts receivable were past due and an allowance for doubtful accounts of 10% of the outstanding balance was needed. For each of the above show how net accounts receivable would be reported on the statement of financial position and calculate bad debt expense for the year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Mobile Technology Ltd. reported an unadjusted balance of accounts receivable of $1,380,000 at 31 December 20X3, along with a credit balance in the allowance for doubtful accounts of $85,000 and an allowance for sales
discounts of $7,900. At year-end, the company determined that an allowance of $21,000 for sales discounts was needed. It also decided that $57,200 of accounts receivable were uncollectible and should be written off. Of
the remaining receivables, it was determined that 30% were current, and of the remaining net current balance, an allowance for doubtful accounts of 4% of the net balance was needed. The remaining 70% of outstanding
accounts receivable were past due and an allowance for doubtful accounts of 10% of the outstanding balance was needed.
For each of the above show how net accounts receivable would be reported on the statement of financial position and calculate bad debt expense for the year.
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