At December 31, 20X0, Oettinger Corporation, a premium kitchen cabinetmaker for the home remodeling industry,reported the following accounts receivable information on its year-end balance sheet:Gross accounts receivable$850,000Less: Allowance for credit losses(25,000)Accounts receivable (net)$825,000During 20X1, the company had credit sales of $8,200,000 of which it collected $7,975,000. Oettinger employs thesales revenue approach to estimate its bad debt provisions and, continuing to use the same 1% used in previousyears, made the normal adjustment at the end of 20X1.Although 20X1 started off well, the industry experienced a slowdown in the last four months of the year, and cashcollections consequently dropped off substantially. Moreover, a major customer, which owed Oettinger $85,000,unexpectedly filed for bankruptcy and went out of business during November, at which time its account was writtenoff. Oettinger's controller is concerned that some customers are experiencing cash flow problems and that thecompany's allowance for credit losses is too low. As a result, she prepared the following schedule:% of AccountsReceivableNumber of Days PastEstimated %BalanceDueCollectible20%0-3098%4031-60953561-9085391-120752Over 12050Required:1-a. Determine Oettinger's accounts receivable balance at December 31, 20X1.1-b. Prepare a journal entry for each transaction affecting the accounts receivable balance for 20X1.2-a. Prepare an aging analysis.2-b. Compute the required balance in the Allowance for credit losses at December 31, 20X1.3. Prepare any other required journal entries affecting the Allowance for credit losses for the year ended December31, 20X1. (Do not duplicate any entries from requirement 1.)4. Show Oettinger's balance sheet presentation of accounts receivable at December 31, 20X1.

Accounts receivable refers to the amount that is yet to be collected from the customers for the goods purchased by them on credit. This is reported as current assets on the balance sheet. 1-a) Calculation of Accounts receivable balance as of December 31, 20X1: 1-b: Journal entries:2-a: Aging schedule: Formula table: Result:2-b) Required balance:3: Journal entries:4: Balance sheet presentation:

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Required: 1-a. Determine Oettinger's accounts receivable balance at December 31, 20X1. 1-b. Prepare a journal entry for each transaction affecting the accounts receivable balance for 20X1. 2-a. Prepare an aging analysis. 2-b. Compute the required balance in the Allowance for credit losses at December 31, 20X1. 3. Prepare any other required journal entries affecting the Allowance for credit losses for the year ended December 31, 20X1. (Do not duplicate any entries from requirement 1.) 4. Show Oettinger's balance sheet presentation of accounts receivable at December 31, 20X1.

Required: 1-a. Determine Oettinger's accounts receivable balance at December 31, 20X1. 1-b. Prepare a journal entry for each transaction affecting the accounts receivable balance for 20X1. 2-a. Prepare an aging analysis. 2-b. Compute the required balance in the Allowance for credit losses at December 31, 20X1. 3. Prepare any other required journal entries affecting the Allowance for credit losses for the year ended December 31, 20X1. (Do not duplicate any entries from requirement 1.) 4. Show Oettinger's balance sheet presentation of accounts receivable at December 31, 20X1.

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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