PROBLEM 1 (MODIFIED) Spring Corporation has the following account balances on December 31, 2020: Accounts receivable Php 400,000 Allowance for uncollectible accounts 8,400 Spring completed the following transactions in 2019: Net credit sales, Php 4,000,000. Collections on accounts, Php 3,870,000. Write-off of uncollectible accounts, Php 10,000. Recovery of accounts previously written-off, Php 2,000. Uncollectible accounts expense, 2/3 of 1% of net credit sales. REQUIRED: Journalize the foregoing transactions. Compute the balance of accounts receivable and allowance for uncollectible accounts at December 31, 2020. What amount of Accounts receivable, net would Spring report on its December 31, 2020 balance sheet? Assume that Spring uses the aging of accounts instead of the percent of sales method in estimating uncollectible accounts. Analysis indicates that Php 30,800 of outstanding accounts on December 31, 2020 may prove to be uncollectible. Compute for the uncollectible accounts expense and the net realizable value of accounts receivable. Which among the method in this case has the higher uncollectible expense account?
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.
PROBLEM 1 (MODIFIED) Spring Corporation has the following account balances on December 31, 2020:
Allowance for uncollectible accounts 8,400
Spring completed the following transactions in 2019:
- Net credit sales, Php 4,000,000.
- Collections on accounts, Php 3,870,000.
- Write-off of uncollectible accounts, Php 10,000.
- Recovery of accounts previously written-off, Php 2,000.
- Uncollectible accounts expense, 2/3 of 1% of net credit sales.
REQUIRED:
- Journalize the foregoing transactions.
- Compute the balance of accounts receivable and allowance for uncollectible accounts at December 31, 2020. What amount of Accounts receivable, net would Spring report on its December 31, 2020
balance sheet ? - Assume that Spring uses the aging of accounts instead of the percent of sales method in estimating uncollectible accounts. Analysis indicates that Php 30,800 of outstanding accounts on December 31, 2020 may prove to be uncollectible. Compute for the uncollectible accounts expense and the net realizable value of accounts receivable.
- Which among the method in this case has the higher uncollectible expense account?
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