Sigma Company began operations on January 1, 2020. On December 31, 2020 and 2021, the entity provided for uncollectible accounts expense based on 1% of annual credit sales. Required: Determine the allowance for doubtful accounts on January 1, 2021. Determine the allowance for doubtful accounts on December 31,2021 before adjustments. Determine the required allowance on December 31,2021. Prepare the adjustment to record the doubtful account expense for the current year.
Sigma Company began operations on January 1, 2020. On December 31, 2020 and 2021, the entity provided for uncollectible accounts expense based on 1% of annual credit sales. Required: Determine the allowance for doubtful accounts on January 1, 2021. Determine the allowance for doubtful accounts on December 31,2021 before adjustments. Determine the required allowance on December 31,2021. Prepare the adjustment to record the doubtful account expense for the current year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
Sigma Company began operations on January 1, 2020. On December 31, 2020 and 2021, the entity provided for uncollectible accounts expense based on 1% of annual credit sales.
Required:
- Determine the allowance for doubtful accounts on January 1, 2021.
- Determine the allowance for doubtful accounts on December 31,2021 before adjustments.
- Determine the required allowance on December 31,2021.
- Prepare the adjustment to record the doubtful account expense for the current year.
Transcribed Image Text:uncollectible accounts expense based on 1% of annual credit
applying certain percentages to the aging of accounts receivable.
December 31, 2020 and 2021, the entity provided for
determining the allowance for uncollectible accounts by
On January 1, 2021, the entity changed the method of
Problem 5-9 (AICPA Adapted)
Sigma Company began operations on
January 1, 2020. On
problem 5-1O
sales.
Days past invoice date
Percent uncollectible
30
90
180
Over 180
What amount shoul
31
91
230,000
200,000
160,000
1
In addition, the entity wrote off all accounts receivable thes
20
80
were over 1 year old.
d100,000
The following additional införmation related to the years ended
December 31, 2021 and 2020:
Roanne Company
for uncollectible ao
had charged P80
ACCounts receivab
Problem 5-11 (I
Credit sales
Collections, including recovery
Accounts written off
Recovery of accounts previously written off
2021
2020
3,000,000
2,915,000
27,000
7,000
2,800,000
2,400,000
What was the de
Days past invoice date
none
900,000
& 800,000
& 100,000
0.
none
0- 30
31 - 90
91 -180
Over 180
300,000
80,000
60,000
25,000
250,000
90,000
46,000
15,000
Problem 5-12
Required:
1. Determine the allowance for doubtful accounts on January
1, 2021.
2. Determine the allowance for doubtful accounts on December
31, 2021 before adjustment.
3. Determine the required allowance on December 31, 2021.
MAI Company's
t the end of 2C
For the year
doubtful accou
What amount
if uncollecti
4. Prepare the adjustment to record the doubtful accounts
expense for the current year.
4 150.000
100,000
250,000
158
350,000
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