Required: 1. Prepare the appropriate bad debt expense adjusting entry for the current year. 2. Show how the various accounts related to accounts receivable should be shown on the December 31, current year, balance sheet.

Required: 1. Prepare the appropriate bad debt expense adjusting entry for the current year. 2. Show how the various accounts related to accounts receivable should be shown on the December 31, current year, balance sheet.

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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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

E6-14 (Algo) Recording and Reporting a Bad Debt Estimate Using Aging Analysis LO6-2
Casilda Company uses the aging approach to estimate bad debt expense. The ending balance of each account receivable is aged on
the basis of three time periods as follows: (1) not yet due, $51,900; (2) up to 180 days past due, $15,800; and (3) more than 180 days
past due, $5,300. Experience has shown that for each age group, the average loss rate on the amount of the receivables at year-end
due to uncollectibility is (1) 3 percent, (2) 11 percent, and (3) 30 percent, respectively. At December 31, the end of the current year, the
Allowance for Doubtful Accounts balance is $400 (credit) before the end-of-period adjusting entry is made.
Required:
1. Prepare the appropriate bad debt expense adjusting entry for the current year.
2. Show how the various accounts related to accounts receivable should be shown on the December 31, current year, balance sheet.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare the appropriate bad debt expense adjusting entry for the current year. (If no entry is required for a transaction/event, select "No
journal entry required" in the first account field.)
View transaction list
Journal entry worksheet
< 1
Record the adjusting journal entry for bad debt expense.
Note: Enter debits before credits.
Date
December 31
Record entry
General Journal
Clear entry
< Required 1
Debit
Credit
View general journal
Required 2 >

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Events that occur after the December 31, 2026 balance sheet date, but before the balance sheet is issued in 2027, and provide additional evidence about conditions that existed at the balance sheet date and affect the realizability of accounts receivable should be used to record an adjustment to Bad Debt Expense for the year ending December 31, 2026. discussed only in the MD&A (Management's Discussion and Analysis) section of the annual report. disclosed only in the Notes to the Financial Statements. used to record an adjustment directly to the Retained Earnings account.
On October 12 of the current year, a company determined that a customer's account receivable was uncollectible and that the account should be written off. Assuming the allowance method is used to account for bad debts, what effect will this write-off have on the company's net income and total assets? Multiple Choice No effect on net income; no effect on total assets. Decrease in net income; no effect on total assets. Decrease in net income; decrease in total assets. No effect on net income; decrease in total assets.
U Your answer is partially correct. Sandhill Corp uses the percentage-of-receivables basis to record bad debt expense. Accounts receivable (ending balance) Allowance for doubtful accounts (unadjusted) The company estimates that 3% of accounts receivable will become uncollectible. (a) Prepare the adjusting journal entry to record bad debt expense for the year. (List debit entry before credit entry. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation $565,000 (debit) 4,900 (debit) Bad Debt Expense Allowance for Doubtful Accounts Debit 21850 Credit 21850
Following is a list of credit customers along with their amounts owed and the days past due at December 31. Following that list are five classifications of accounts receivable and estimated bad debts percent for each class.A)Create an aging of accounts receivable schedule similar to Exhibit 9.8 and calculate the estimated balance for the Allowance for Doubtful Accounts.B)Assuming an unadjusted credit balance of $100, record the required adjustment to the Allowance for Doubtful Accounts
Need answer in proper format
Determine the amount to be added to Allowance for Doubtful Accounts in each of the following cases and indicate the ending balance in each case. a. Credit balance of $460 in Allowance for Doubtful Accounts just prior to adjustment. Analysis of Accounts Receivable indicates uncollectible receivables of $7,040. Amount added Ending balance b. Credit balance of $460 in Allowance for Doubtful Accounts just prior to adjustment. Uncollectible receivables are estimated at 3% of credit sales, which totaled $1,009,000 for the year. Amount added Ending balance
The initial journal entry used to record the estimate for bad debt expense includes a (Select all answers that apply): O credit to Allowance for Uncollectible Accounts. O debit to Accounts Payable O debit to Allowance for Uncollectible Accounts. O debit to Bad Debt Expense. O credit to Accounts Receivable. O credit to Bad Debt Expense. O credit to Accounts Payable O debit to Accounts Receivable. ASUS f4 f5 E3 f6 f7 f8 f9 f10 f11 团 4. 8. T 因 6 近 86 图 %24