The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.90% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Year 2 $ 375,000 Year 3 $ 374,000 Unknown 335,750 Unknown 333,000 Unknown Unknown Sales Revenue Bad Debt Expense Other Expenses Net Income Year 1 $ 369,000 Unknown 340,000 Unknown Required: a. Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.90% of sales. b. Assume that the company changes its estimate of uncollectible credit sales to 1.90% in Year 1, 2.90% in Year 2 and 2.40% in Year 3. Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario.

The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.90% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Year 2 $ 375,000 Year 3 $ 374,000 Unknown 335,750 Unknown 333,000 Unknown Unknown Sales Revenue Bad Debt Expense Other Expenses Net Income Year 1 $ 369,000 Unknown 340,000 Unknown Required: a. Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.90% of sales. b. Assume that the company changes its estimate of uncollectible credit sales to 1.90% in Year 1, 2.90% in Year 2 and 2.40% in Year 3. Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario.

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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4. Tooele Company's controller estimated bad debt expense using the percentage of accounts receivable method. Total sales for the year were $500,000 of which 250,000 are on account. The ending balance in accounts receivable was $100,000. An examination of the outstanding accounts at the end of the year indicates that approximately 12 percent of these accounts will ultimately prove to be uncollectible. Before any adjusting entries, the balance in the Allowance for Doubtful Accounts is $700 (CREDIT). Which is part of the correct adjusting entry to record bad debt expense for the year? (The Allowance for Doubtful Accounts is also known as the Allowance for Bad Debts or the Allowance for Uncollectible Accounts.) a. CREDIT Allowance for Bad Debts for $11,300 b. DEBIT Allowance for Bad Debts for $11,300 c. CREDIT Allowance for Bad Debts for $12,000 d. CREDIT Allowance for Bad Debts for $12,700 e. DEBIT Allowance for Bad Debts for $14,700
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The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.30% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Year 1 Year 2 Year 3 Sales Revenue $ 373,000 $ 379,000 $ 378,000 Bad Debt Expense Unknown Unknown Unknown Other Expenses 334,000 337,000 334,750 Net Income Unknown Unknown Unknown Required: Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.30% of sales. Assume that the company changes its estimate of uncollectible credit sales to 1.30% in Year 1, 2.30% in Year 2 and 1.80% in Year 3. Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario.
The beginning Accounts Receivable and Allowance for Doubtful Accounts balances of ABC Corporation are P500,000 and P50,000. Net credit sales totaled P4,500,000 during the year while collections amounted to P4,400,000. Bad debts expense for the year is P30,000. Included in the collections was a P10,000 account that was written off in the prior year and was recovered during the current year. What is the net realizable value of the Accounts Receivable as of the end of the year? The answer is 520000. Explain how can we arrive at this answer.
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The beginning Accounts Receivable and Allowance for Doubtful Accounts balances of ABC Corporation are P500,000 and P50,000. Net credit sales totaled P4,500,000 during the year while collections amounted to P4,400,000.Bad debts expense for the year is P30,000. Included in the collections was a P10,000 account that was written off in the prior year and was recovered during the current year. What is the net realizable value of the Accounts Receivable as of the end of the year? *
The Dubious Company operates in an industry where all sales are made on account. The company has experienced bad debt losses of 1.40% of credit sales in prior periods. Presented below is the company's forecast of sales and expenses over the next three years. Year 1 Year 2 Year 3 Sales Revenue $ 377,000 $ 383,000 $ 382,000 Bad Debt Expense Unknown Unknown Unknown Other Expenses 330,000 336,000 334,750 Net Income Unknown Unknown Unknown Required: Calculate Bad Debt Expense and net income for each of the three years, assuming uncollectible accounts are estimated as 1.40% of sales. Assume that the company changes its estimate of uncollectible credit sales to 1.40% in Year 1, 2.40% in Year 2 and 1.90% in Year 3. Calculate the Bad Debt Expense and net income for each of the three years under this alternative scenario
Alpaca Consulting Inc reported net sales of $1,500,000 for the year. Also, at at the end of the year, the company reported balances of $390,000 and $3,800 of accounts receivables and allowance for doubtful accounts, respectively. All amounts and balances have normal balances. REQUIRED: 1. Assume the company estimates its bad debts as 1.20% of net sales. Record the required adjusting entry to record bad debts. The journal must be properly formatted. 2. Assume the company estimates its uncollectible accounts as 5% of accounts receivable. Record the required adjusting entry to record bad debts. The journal must be properly formatted.
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5. The Adams Company had total credit sales for the year of $1,500,000. As of year end, but before estimating bad debts, the company had a $130,000 debit balance in accounts receivable and a $500 credit balance in the allowance for uncollectible accounts. If the Adams Company estimates bad debts as 4% of ending accounts receivable, the journal entry of the Adams Company will be: a. Bad debt expense Allowance for doubtful accounts b. Bad debt expense Accounts receivable c. Bad debt expense Accounts receivable d. Bad debt expense Allowance for doubtful accounts $4,700 $5,200 $5,200 $5,700 $4,700 $5,200 $5,200 $5,700
USE TGHE FOLLOWING TO SOLVE FOR QUESTION7 ONLY Tooele Company’s controller estimated bad debt expense using the percentage of accountsreceivable method. Total sales for the year were $500,000 of which 250,000 are on account.The ending balance in accounts receivable was $100,000. An examination of the outstandingaccounts at the end of the year indicates that approximately 12 percent of these accounts willultimately prove to be uncollectible. Before any adjusting entries, the balance in theAllowance for Doubtful Accounts is $700 (CREDIT). Which is part of the correct adjustingentry to record bad debt expense for the year?(The Allowance for Doubtful Accounts is also known as the Allowance for Bad Debts or theAllowance for Uncollectible Accounts.)a. CREDIT Allowance for Bad Debts for $11,300b. DEBIT Allowance for Bad Debts for $11,300c. CREDIT Allowance for Bad Debts for $12,000d. CREDIT Allowance for Bad Debts for $12,700e. DEBIT Allowance for Bad Debts for $14,700 5. Use the…
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