The chief accountant for Ayayai Corporation provides you with the following list of accounts receivable that were written off in thecurrent year:DateCustomerMar. 31Wildhorse Co.Amount$7,590June 30Windsor, Inc.6.520Sept. 30Annie Lowell's Dress Shop11,500Dec. 31Vahik Uzerian6,300Ayayai does not use an allowance method; instead, it follows the policy of debiting Bad Debt Expense as accounts are written off.The chief accountant maintains that this procedure is appropriate for financial statement purposes. Ayayai is a small company thatfollows ASPE.All of Ayayai's sales are on a 30-day credit basis, and the accounts written off all related to current-year sales. Sales for the year total$3.05 million, and your research suggests that bad debt losses approximate 2% of sales.(b)By what amount would net income differ if bad debt expense was calculated using the allowance method and percentage-of-salesapproach?Bad debt expense using allowance method and percentage-of-sales approach$Bad debt expense using the direct write off method$Difference in net income$

Estimated bad debt expense under allowance method = Sales * 2%Estimated bad debt expense under…

Answered: The chief accountant for Ayayai…

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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Bennett Company uses the allowance method to account for uncollectible accounts. Prepare the appropriate journal entries to record the following transactions during 2010. You may omit journal entry explanations. June 20 The account of Ken Watts for $1,000 was deemed to be uncollectible and is written off as a bad debt. Received a check for $1,000 from Ken Watts, whose account had previously been written off as uncollectible. Oct. 14 Dec. 31 Use the following information for year-end adjusting entries: The balance of Accounts Receivable and Allowance for Doubtful Accounts at year end are $131,000 and $2,900, respectively. It is estimated that bad debts will be 4% of accounts receivable.
Explain why companies must use the Allowance Method, and not the Direct Write-Off Method, when dealing with collectible accounts. Then show a journal entry writing off an account with both methods. Note: Please see below as I don't believe what I came up with is detailed enough. Please include actual amounts for this problem. The amounts can be made up, but a journal entry utilizing both methods must be included. Let's assume that a corporation begins operations on November 1 in an industry where it is common to give credit terms of net 30 days. In this industry, approximately 0.3% of credit sales will not be collected. Next, let's assume that the corporation focuses on the bad debts expense. If the corporation's actual credit sales for November are $800,000, it will record an adjusting entry dated November 30 to debit the bad debts expense for $2,400 ($800,000 X 0.003) and credit an allowance for doubtful accounts in the amount of $2,400. As a result, its November income statement…
Assume the aging of accounts receivable method was used by the company and that $7050 of the accounts receivable as of Dec 31 were estimated to be uncollectible. You are now required to: a) Determine the amount to be charged to uncollectible expense( show your workings for the computation of this figure).
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For a business that uses the allowance method of accounting for uncollectible receivables: Journalize the entries to record the following: Use correct journal format. Just use the month for the date. Record the adjusting entry at December 31, the end of the first fiscal year, to record the bad debt expense. The accounts receivable account has a balance of $850,000, and the contra asset account before adjustment has a debit balance of $4000. Analysis of the receivables (aging) indicates uncollectible receivables of $17,200. In March of the next year, the $720 owed by Fronk Co. on account is written off as uncollectible. In November of the next year, $400 of the Fronk Co. account 1s reinstated and payment of that amount is received. In December of the next year, $250 is received on the $800 owed by Dodger Co. and the remainder is written off as uncollectible.
Ayayai Corp. uses the allowance method for estimating uncollectible accounts. Prepare journal entries to record the following transactions: (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) January 5 Sold merchandise to Sue Land for $2,100, terms n/15. April 15 Received $430 from Sue Land on account. August 21 Wrote off as uncollectible the balance of the Sue Land account when she declared bankruptcy. October 5 Unexpectedly received a check for $690 from Sue Land. Date Account Titles and Explanation Debit Credit Choose a transaction date January 5April 15August 21October 5 Enter an account title to record sales on account Enter a debit amount Enter a credit amount Enter an account title to record sales on account Enter a debit amount Enter a credit amount…
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During the year, Blossom Enterprises made an entry to write off an $8100 uncollectible account. Before this entry was made, the balance in accounts receivable was $100100 and the balance in the allowance account was $9100 (credit balance). The net realizable value of accounts receivable before and after the write-off entry was O$100100. Ⓒ$99100. O $82900 O $91000
Journalize the following transactions using the allowance method of accounting foruncollectible receivables:Sep 1. Received $600 from Jane and wrote off the remainder owed of $1350 as uncollectible.Nov15.Reinstated the account Jane that had been written off on Sep 1 and received $1350 cash in full payment.
If Metlock Company uses the allowance method to account for uncollectible accounts, journalize the entry if on May 8 Metlock determined that Randal Company's $760 balance is uncollectible. (List debit entry before credit entry. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation May 8 Bad Debt Expense Allowance for Doubtful Accounts Debit 760 Credit 760
Subject - account Please help me. Thankyou.

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