Question 8 Dreadful Behaviour Ltd has credit sales of $400,000 in 2022 and a debit balance of $1,900 in the Allowance for Doubtful Accounts at year end. As of December 31, 2022, $120,000 of accounts receivable remain uncollected. The credit manager of Dangle prepared an aging schedule of accounts abnor receivable and estimates that $4,800 will prove to be uncollectible. On March 3, 2023 the credit manager authorizes a write-off of the $1,000 balance owed by D. Taylor. On April 1, 2023 Mr. Taylor pays his account in full and also pays Dangle $75 interest on his account Required (a) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2022. (b) Show the statement of financial position presentation of accounts receivable on December 31, 2022. (c) On March 3, 2023 before the write-off, assume the balance of Accounts Receivable account is $160,000 and the balance of Allowance for Doubtful Accounts is a credit of $3,000. Make the appropriate entry to record the write-off of the Taylor account. Also show the appropriate statement of financial position presentation of accounts receivable before and after the write-off. Record the payment received on April 1, 2023. (d) (e) Assume Dreadful Behaviour uses a percentage of sales spproach for bad debts. If the estimated loss From bad debts is 34 of one percent, what is the bad debt entry for 2022?
Question 8 Dreadful Behaviour Ltd has credit sales of $400,000 in 2022 and a debit balance of $1,900 in the Allowance for Doubtful Accounts at year end. As of December 31, 2022, $120,000 of accounts receivable remain uncollected. The credit manager of Dangle prepared an aging schedule of accounts abnor receivable and estimates that $4,800 will prove to be uncollectible. On March 3, 2023 the credit manager authorizes a write-off of the $1,000 balance owed by D. Taylor. On April 1, 2023 Mr. Taylor pays his account in full and also pays Dangle $75 interest on his account Required (a) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2022. (b) Show the statement of financial position presentation of accounts receivable on December 31, 2022. (c) On March 3, 2023 before the write-off, assume the balance of Accounts Receivable account is $160,000 and the balance of Allowance for Doubtful Accounts is a credit of $3,000. Make the appropriate entry to record the write-off of the Taylor account. Also show the appropriate statement of financial position presentation of accounts receivable before and after the write-off. Record the payment received on April 1, 2023. (d) (e) Assume Dreadful Behaviour uses a percentage of sales spproach for bad debts. If the estimated loss From bad debts is 34 of one percent, what is the bad debt entry for 2022?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Transcribed Image Text:Question 8
Dreadful Behaviour Ltd has credit sales of $400,000 in 2022 and a debit balance of $1,900 in the
Allowance for Doubtful Accounts at year end. As of December 31, 2022, $120,000 of accounts
receivable remain uncollected. The credit manager of Dangle prepared an aging schedule of accounts
abnor receivable and estimates that $4,800 will prove to be uncollectible.
On March 3, 2023 the credit manager authorizes a write-off of the $1,000 balance owed by D. Taylor.
On April 1, 2023 Mr. Taylor pays his account in full and also pays Dangle $75 interest on his account
Required
(a) Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2022.
(b) Show the statement of financial position presentation of accounts receivable on December 31, 2022.
(c) On March 3, 2023 before the write-off, assume the balance of Accounts Receivable account is
$160,000 and the balance of Allowance for Doubtful Accounts is a credit of $3,000. Make the
appropriate entry to record the write-off of the Taylor account. Also show the appropriate statement
of financial position presentation of accounts receivable before and after the write-off.
Record the payment received on April 1, 2023.
(d)
(e) Assume Dreadful Behaviour uses a percentage of sales spproach for bad debts. If the estimated loss
From bad debts is 34 of one percent, what is the bad debt entry for 2022?
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