Providing for Doubtful Accounts At the end of the current year, the accounts receivable account has a balance of $3,060,000 and sales for the year total $48,500,000. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below X Open spreadsheet Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following independent assumptions: a. The allowance account before adjustment has a negative balance of $(18,800). An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $350,000. b. The allowance account before adjustment has a positive balance of $9,400. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $300,000. Feedback ✓ Check My Work a-b. Using the percent of sales method, Bad Debt Expense is determined by multiplying sales by the estimated percentage uncollectible. Using the analysis of receivables method, Bad Debt Expense is determined by completing an analysis of the aging of the receivables and then comparing that total with the current balance in the allowance account. The difference is recorded as Bad Debt Expense.
Providing for Doubtful Accounts At the end of the current year, the accounts receivable account has a balance of $3,060,000 and sales for the year total $48,500,000. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below X Open spreadsheet Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following independent assumptions: a. The allowance account before adjustment has a negative balance of $(18,800). An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $350,000. b. The allowance account before adjustment has a positive balance of $9,400. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of $300,000. Feedback ✓ Check My Work a-b. Using the percent of sales method, Bad Debt Expense is determined by multiplying sales by the estimated percentage uncollectible. Using the analysis of receivables method, Bad Debt Expense is determined by completing an analysis of the aging of the receivables and then comparing that total with the current balance in the allowance account. The difference is recorded as Bad Debt Expense.
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:Providing for Doubtful Accounts
At the end of the current year, the accounts receivable account has a balance of $3,060,000 and sales for the year total $48,500,000.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.
X
Open spreadsheet
Determine the amount of the adjusting entry to provide for doubtful accounts under each of the following independent assumptions:
a. The allowance account before adjustment has a negative balance of $(18,800). An aging of the accounts in the customer ledger indicates estimated doubtful accounts
of $350,000.
b. The allowance account before adjustment has a positive balance of $9,400. An aging of the accounts in the customer ledger indicates estimated doubtful accounts of
$300,000.
Feedback
Check My Work
a-b. Using the percent of sales method, Bad Debt Expense is determined by multiplying sales by the estimated percentage uncollectible. Using the analysis of
receivables method, Bad Debt Expense is determined by completing an analysis of the aging of the receivables and then comparing that total with the current
balance in the allowance account. The difference is recorded as Bad Debt Expense.
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