Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded onlyat December 31, the company's fiscal year-end. The 2023 balance sheet disclosed the following:Current assets:Receivables, net of allowance for uncollectible accounts of $37,000During 2024, credit sales were $1,785,000, cash collections from customers $1,865,000, and $42,000 in accounts receivable werewritten off. In addition, $3,700 was collected from a customer whose account was written off in 2023. An aging of accounts receivableat December 31, 2024, reveals the following:Age Group0-60 days61-90 days91-120 daysOver 120 daysPercentage of Year-End Receivables inGroup60%102010$ 467,000PercentUncollectible3852545Required:1. Prepare summary journal entries to account for the 2024 write-offs and the collection of the receivable previously written off.2. Prepare the year-end adjusting entry for bad debts according to each of the following situations:a. Bad debt expense is estimated to be 2% of credit sales for the year.b. Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces thecarrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectibleaccounts is estimated to be 10% of the year-end balance in accounts receivable.c. Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces thecarrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectibleaccounts is determined by an aging of accounts receivable.3. For situations (a)-(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2024 balancesheet?

Under aging of accounts receivable method, the accounts receivables are categorized according to its…

Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2023 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $37,000 During 2024, credit sales were $1,785,000, cash collections from customers $1,865,000, and $42,000 in accounts receivable were written off. In addition, $3,700 was collected from a customer whose account was written off in 2023. An aging of accounts receivable at December 31, 2024, reveals the following: Age Group 0-60 days 61-90 days 91-120 days Over 120 days Percentage of Year- End Receivables in Group 60% 10 20 10 Percent Uncollectible $ 467,000 3% 5 25 45

Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2023 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $37,000 During 2024, credit sales were $1,785,000, cash collections from customers $1,865,000, and $42,000 in accounts receivable were written off. In addition, $3,700 was collected from a customer whose account was written off in 2023. An aging of accounts receivable at December 31, 2024, reveals the following: Age Group 0-60 days 61-90 days 91-120 days Over 120 days Percentage of Year- End Receivables in Group 60% 10 20 10 Percent Uncollectible $ 467,000 3% 5 25 45

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2023 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $36,000 $ 462,000 During 2024, credit sales were $1,780,000, cash collections from customers $1,860,000, and $41,000 in accounts receivable were written off. In addition, $3,600 was collected from a customer whose account was written off in 2023. An aging of accounts receivable at December 31, 2024, reveals the following: Age Group 0-60 days 61-90 days 91-120 days Percentage of Year- End Receivables in Group Percent Uncollectible 70% 20 5% 15 5 20 5 40 Over 120 days Required: 1. Prepare summary journal entries to account for the 2024 write-offs and the collection of the receivable previously written off. 2. Prepare the year-end adjusting entry for bad debts according to each of the…
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Edsel Inc. has the following unadjusted year end trial balance information available for 2018: Credit sales Ending accounts receivable balance. Ending allowance for uncollectibles Estimated uncollectibles Multiple Choice If Edsel uses the gross accounts receivable approach for estimating the bad debt provision, the allowance for uncollectibles account, afte accounts are recorded, should show a balance of. O $2,600 O $3,600 $600,000 $180,000 $1,500 O $5,600 2%
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