Taft Corp., which began business on January 1, 2008, appropriately uses the installment sales method of accounting. The following data are available for December 31, 2008 and 2009: The installment accounts receivable balance at December 31, 2009 is

Taft Corp., which began business on January 1, 2008, appropriately uses the installment sales method of accounting. The following data are available for December 31, 2008 and 2009: The installment accounts receivable balance at December 31, 2009 is

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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The information in the following table relates to the accounts receivable and allowance for doubtful debts of Prime Moving Ltd. The company’s accounting period ends on 30 June each year. The company policy is to provide an allowance for doubtful debts at the rate of 3% of accounts receivable at 30 June each year. The balance of the Allowance for Doubtful Debts account on 1 July 2019 was $10 000. The following information is given for the year ending 30 June 2020 and 30 June 2021, to determine the bad debts expense for each year and the balance of allowance for doubtful debts at the end of each year. 2020 2021 Accounts receivable (ending balance at 30 June) $400,000 $450,000 Bad debts written off during the year 6,000 0 Allowance for doubtful debts at 1 July (Beginning of the period) (a) (d) Bad debts expense for the year (b) (e) Allowance for doubtful debts at 30 June (Ending balance) (c) (f) Required: Determine the missing…
Following are selected transactions of Youth Inc. during December 2016. Dec 1: Youth accepted a one year 8% note receivable from a new customer, GGC. The note is in settlement of an existing $1,500 account receivable. The note plus interest is due on November 30, 2016. Dec 8: An account receivable from JJ in the amount of $700 is determined to be uncollectible and is written off against the Allowance for Doubtful Accounts. Dec 15: Received $200 from one of its clients. Originally this amount was written off as uncollectible since Youth never expected to receive this amount from its client. Additional information for adjusting entries is as follows: An aging of accounts receivable indicates very likely uncollectible accounts totaling $9,000. Prior to the month-end adjustment, the Allowance for Doubtful Accounts had a credit balance of $5,210. Accrued interest revenue on the note receivable from GGC dated December 1, 2016. Prepare the journal entries for December…
Hogan Company uses the net method of accounting for sales discounts. Hogan offers trade discounts to variousgroups of buyers.On August 1, 2018, Hogan factored some accounts receivable on a without recourse basis. Hogan incurred afinance charge.Hogan also has some notes receivable bearing an appropriate rate of interest. The principal and total interestare due at maturity. The notes were received on October 1, 2018, and mature on September 30, 2019. Hogan’soperating cycle is less than one year.Required:1. a. Using the net method, how should Hogan account for the sales discounts at the date of sale? What is therationale for the amount recorded as sales under the net method?b. Using the net method, what is the effect on Hogan’s sales revenues and net income when customers do nottake the sales discounts?2. What is the effect of trade discounts on sales revenues and accounts receivable? Why?3. How should Hogan account for the accounts receivable factored on August 1, 2018? Why?4. How should…
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Jars Plus recorded $862,430 in credit sales for the year and $489,000 in accounts receivable. The uncollectible percentage is 2.3% for the income statement method, and 3.0% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $10,220, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $5,470, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. If an amount box does not require an entry, leave it blank. If required, round final answers to two decimal places. A. Dec. 31 Bad Debt Expense 88 88 88 38 88 88 Allowance for…
What is the adjusted balance of the Accounts Receivable account as of December 31, 2016?
Funnel Direct recorded $1,341,780 in credit sales for the year and $699,455 in accounts receivable. The uncollectible percentage is 4.4% for the income statement method and 4% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $13,588; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. If an amount box does not require an entry, leave it blank. Round your answers to two decimal places. A. Dec. 31 - Select - - Select - - Select - - Select - To record bad debt, income statement method B. Dec. 31 - Select - - Select - - Select - - Select - To record bad debt, balance sheet method C. Dec. 31 - Select - - Select -…
The information in the following table relates to the accounts receivable and allowance for doubtful debts of Prime Moving Ltd. The company’s accounting period ends on 30 June each year. The company policy is to provide an allowance for doubtful debts at the rate of 3% of accounts receivable at 30 June each year. The balance of the Allowance for Doubtful Debts account on 1 July 2019 was $13,000. The following information is given for the year ending 30 June 2020 and 30 June 2021, in order to determine the bad debts expense for each year and the balance of allowance for doubtful debts at the end of each year. 2020 2021 Accounts receivable (ending balance at 30 June) $520,000 $585,000 Bad debts written off during the year 7,800 0 Allowance for doubtful debts at 1 July (Beginning of the period) (a) (d) Bad debts expense for the year (b) (e) Allowance for doubtful debts at 30 June (Ending balance) (c) (f) Required: Determine the…
The following information has been extracted from the annual reports of Lilydale Ltd and Monbulk Ltd. Lilydale Ltd Monbulk Ltd $2 950 300 17 100 Sales (net credit) revenue for year Allowance for Doubtful Debts, 1/7/18 Allowance for Doubtful Debts, 30/6/19 Accounts receivable (gross) 1/7/18 Accounts receivable (gross) 30/6/19 $2 204 300 27 100 19780 28 100 722 650 368 000 485 800 384 200 (a) Calculate the receivables turnover ratio and average collection period for both companies. Comment on the difference in their collection experiences. (b) Compare the success or otherwise of their cash collection policies, given that the average receivables turnover for the industry in which the companies operated is 7. Credit terms for both companies are 2/10, n/30.
5. Guernsey Company began operations on January 1, 2021. On December 31, 2021, the entity provided doubtful accounts based on 1% of annual credit sales. On January 1, 2022, the entity changed the method of determining the allowance for doubtful accounts by aging of accounts receivable. Days past invoice date Percent uncollectible 0 - 30 31 90 91 - 180 Over 180 1 5 20 80 In addition, the entity wrote off all accounts receivable that were over 1 year old. The entity provided the following additional information: 0 - 30 31 - 90 91 - 180 Over 180 Credit sales Collections, including recovery Accounts written off Recovery of accounts previously written off Days past invoice date at December 31 2022 2021 3,000,000 2,800,000 2,915,000 2,400,000 27,000 7,000 300,000 80,000 60,000 25,000 None None 250,000 90,000 45,000 15,000 a. What is the allowance for doubtful accounts on December 31, 2021? b. What is the allowance for doubtful accounts on December 31, 2022? c. What amount should be reported…
James Company uses the allowance method for uncollectible accounts. James Company accepted a $8,500, 6%, 90-day note dated May 16, from Davis Company in exchange for its past-due account receivable. Make the necessary general journal entries for James Company on May 16 and the August 14 maturity date, assuming that the: a. Note is honored. b. Note is dishonored.
The year-end financial statements of Prize Inc. include the accounts receivable footnote:Total accounts and other receivables at December 31 consisted of the following: (in millions) Year 2 Year 1 Total accounts and other receivables $444.4 $476.6 Allowance for doubtful accounts (6.0) (8.4) Total accounts and other receivables, net $438.4 $468.2 The balance sheet reports total assets of $2,984.1 million at December 31, Year 2.The common-size amount for gross accounts and other receivables are: Select one: a. $444.4 million b. None of these are correct. c. 14.7% d. 14.9% e. $438.4 million