On December 31, 2017, Extreme Fitness has an adjusted balance of $720,000 in Accounts Receivable. On January 2, 2018, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $50,400. Extreme Fitness uses the direct write-off method. What amount would the company report as its net accounts receivable on December 31, 2017? Prepare the journal entry to write off the accounts on January 2, 2018. Assuming no other transactions occurred between December 31, 2017, and January 3, 2018, what amount would the company report as its net accounts receivable on January 3, 2018? Has net accounts receivable changed from December 31, 2017?
On December 31, 2017, Extreme Fitness has an adjusted balance of $720,000 in Accounts Receivable. On January 2, 2018, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $50,400. Extreme Fitness uses the direct write-off method. What amount would the company report as its net accounts receivable on December 31, 2017? Prepare the journal entry to write off the accounts on January 2, 2018. Assuming no other transactions occurred between December 31, 2017, and January 3, 2018, what amount would the company report as its net accounts receivable on January 3, 2018? Has net accounts receivable changed from December 31, 2017?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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M8-16 (Supplement 8A) Recording Write-Offs and Reporting Accounts Receivable Using the Direct Write-Off Method [LO 8-S1]
On December 31, 2017, Extreme Fitness has an adjusted balance of $720,000 in Accounts Receivable. On January 2, 2018, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $50,400. Extreme Fitness uses the direct write-off method.
- What amount would the company report as its net accounts receivable on December 31, 2017?
- Prepare the
journal entry to write off the accounts on January 2, 2018. - Assuming no other transactions occurred between December 31, 2017, and January 3, 2018, what amount would the company report as its net accounts receivable on January 3, 2018? Has net accounts receivable changed from December 31, 2017?
Req A:
What amount would the company report as its net accounts receivable on December 31, 2017?
|
Req B:
Prepare the journal entry to write off the accounts on January 2, 2018. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
- Record the write-off of certain customer accounts which are not collectible totaling $10,000.
|
Req C1:
Assuming no other transactions occurred between December 31, 2017, and January 3, 2018, what amount would the company report as its net accounts receivable on January 3, 2018?
|
Req C2:
Has net accounts receivable changed from December 31, 2017?
|
![**M8-16 (Supplement 8A) Recording Write-Offs and Reporting Accounts Receivable Using the Direct Write-Off Method [LO 8-S1]**
On December 31, 2017, Extreme Fitness has an adjusted balance of $720,000 in Accounts Receivable. On January 2, 2018, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $50,400. Extreme Fitness uses the direct write-off method.
a. **What amount would the company report as its net accounts receivable on December 31, 2017?**
- The net accounts receivable reported on December 31, 2017, is $669,600.
b. **Prepare the journal entry to write off the accounts on January 2, 2018.**
(This part requires preparing a journal entry, but it isn't shown in the image.)
c. **Assuming no other transactions occurred between December 31, 2017, and January 3, 2018, what amount would the company report as its net accounts receivable on January 3, 2018? Has net accounts receivable changed from December 31, 2017?**
(This question refers to potential changes in net accounts receivable, but specific answers are not displayed in the image.)
**Graphical Explanation:**
The image includes a section called "Complete this question by entering your answers in the tabs below," which contains a placeholder for answers under different requirements labeled as "Req A," "Req B," "Req C1," and "Req C2." An error message highlights that "Answer is not complete." The entries are not filled out for some requirements. The image shows a field with "Accounts Receivable" labeled as $669,600, which is the net accounts receivable after deducting the uncollectible amount.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5360072c-0ede-4737-93a9-b2f8ee285421%2F6d76e223-c41b-40d7-9192-39eba882bcbf%2F4jt5sdi_processed.png&w=3840&q=75)
Transcribed Image Text:**M8-16 (Supplement 8A) Recording Write-Offs and Reporting Accounts Receivable Using the Direct Write-Off Method [LO 8-S1]**
On December 31, 2017, Extreme Fitness has an adjusted balance of $720,000 in Accounts Receivable. On January 2, 2018, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $50,400. Extreme Fitness uses the direct write-off method.
a. **What amount would the company report as its net accounts receivable on December 31, 2017?**
- The net accounts receivable reported on December 31, 2017, is $669,600.
b. **Prepare the journal entry to write off the accounts on January 2, 2018.**
(This part requires preparing a journal entry, but it isn't shown in the image.)
c. **Assuming no other transactions occurred between December 31, 2017, and January 3, 2018, what amount would the company report as its net accounts receivable on January 3, 2018? Has net accounts receivable changed from December 31, 2017?**
(This question refers to potential changes in net accounts receivable, but specific answers are not displayed in the image.)
**Graphical Explanation:**
The image includes a section called "Complete this question by entering your answers in the tabs below," which contains a placeholder for answers under different requirements labeled as "Req A," "Req B," "Req C1," and "Req C2." An error message highlights that "Answer is not complete." The entries are not filled out for some requirements. The image shows a field with "Accounts Receivable" labeled as $669,600, which is the net accounts receivable after deducting the uncollectible amount.
![**M8-16 (Supplement 8A) Recording Write-Offs and Reporting Accounts Receivable Using the Direct Write-Off Method [LO 8-S1]**
On December 31, 2017, Extreme Fitness has an adjusted balance of $720,000 in Accounts Receivable. On January 2, 2018, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $50,400. Extreme Fitness uses the direct write-off method.
a. What amount would the company report as its net accounts receivable on December 31, 2017?
b. Prepare the journal entry to write off the accounts on January 2, 2018.
c. Assuming no other transactions occurred between December 31, 2017, and January 3, 2018, what amount would the company report as its net accounts receivable on January 3, 2018? Has net accounts receivable changed from December 31, 2017?
**Answer is not complete.**
Complete this question by entering your answers in the tabs below.
- Req A
- Req B
- Req C1
- Req C2
**Prepare the journal entry to write off the accounts on January 2, 2018.** *(If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)*
| No. | Date | General Journal | Debit | Credit |
|-----|-----------------|------------------------------------|---------|---------|
| 1 | January 02, 2018| Accounts Receivable | 62,300 | |
| | | Allowance for Doubtful Accounts | | 62,300 |
This section guides students through recording and reporting accounts receivable write-offs using the direct write-off method. It involves understanding the impact of uncollectible accounts on financial statements and the step-by-step process of executing journal entries.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5360072c-0ede-4737-93a9-b2f8ee285421%2F6d76e223-c41b-40d7-9192-39eba882bcbf%2F3edc7kd_processed.png&w=3840&q=75)
Transcribed Image Text:**M8-16 (Supplement 8A) Recording Write-Offs and Reporting Accounts Receivable Using the Direct Write-Off Method [LO 8-S1]**
On December 31, 2017, Extreme Fitness has an adjusted balance of $720,000 in Accounts Receivable. On January 2, 2018, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $50,400. Extreme Fitness uses the direct write-off method.
a. What amount would the company report as its net accounts receivable on December 31, 2017?
b. Prepare the journal entry to write off the accounts on January 2, 2018.
c. Assuming no other transactions occurred between December 31, 2017, and January 3, 2018, what amount would the company report as its net accounts receivable on January 3, 2018? Has net accounts receivable changed from December 31, 2017?
**Answer is not complete.**
Complete this question by entering your answers in the tabs below.
- Req A
- Req B
- Req C1
- Req C2
**Prepare the journal entry to write off the accounts on January 2, 2018.** *(If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)*
| No. | Date | General Journal | Debit | Credit |
|-----|-----------------|------------------------------------|---------|---------|
| 1 | January 02, 2018| Accounts Receivable | 62,300 | |
| | | Allowance for Doubtful Accounts | | 62,300 |
This section guides students through recording and reporting accounts receivable write-offs using the direct write-off method. It involves understanding the impact of uncollectible accounts on financial statements and the step-by-step process of executing journal entries.
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