Thế Glasser Company had balances in accounts receivable $280, and in the allowance for bad debts account of $20,000 as of the end of 2017. In the next two years the following results occurred: Year 2018 Credit Sales $2,900,000 $3,500,000 Collections $2,710,000 $3,219,000 Writeoffs $ 86,000 $102,000 2019 It is estimated that bad debts will amount to 4% of credit sales. A. Given GAAP and IRS regulations, determine what would be shown on the income statement and the tax form for bad debts for 2019. Also show what would be reported on the balance sheet as of the end of 2019 assuming that the company utilizes a "full presentation," i.e. includes`the appropriate contra account. 2019 Optional Worksheet Space (Not to be graded) Income 2019 Statement Tax Form Balance Sheet Presentation: B. Calculate the number of days sales that there are in accounts receivable as of the end of 2018 and 2019. Use year-end amounts for AR (i.e., no averages), and assume a 365-day year. Note: Number of Days Sales = (Gross AR/Sales) x 365 2018 2019 c. For 2019, how much of the dollar growth in gross accounts receivable is due to the growth in sales? How much is due to a change in the speed of collections? Sales Growth Change In Speed of Collections

Thế Glasser Company had balances in accounts receivable $280, and in the allowance for bad debts account of $20,000 as of the end of 2017. In the next two years the following results occurred: Year 2018 Credit Sales $2,900,000 $3,500,000 Collections $2,710,000 $3,219,000 Writeoffs $ 86,000 $102,000 2019 It is estimated that bad debts will amount to 4% of credit sales. A. Given GAAP and IRS regulations, determine what would be shown on the income statement and the tax form for bad debts for 2019. Also show what would be reported on the balance sheet as of the end of 2019 assuming that the company utilizes a "full presentation," i.e. includes`the appropriate contra account. 2019 Optional Worksheet Space (Not to be graded) Income 2019 Statement Tax Form Balance Sheet Presentation: B. Calculate the number of days sales that there are in accounts receivable as of the end of 2018 and 2019. Use year-end amounts for AR (i.e., no averages), and assume a 365-day year. Note: Number of Days Sales = (Gross AR/Sales) x 365 2018 2019 c. For 2019, how much of the dollar growth in gross accounts receivable is due to the growth in sales? How much is due to a change in the speed of collections? Sales Growth Change In Speed of Collections

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 balance sheet at the end of 2018 reported Accounts Receivable of $785,500 and Allowance for Doubtful Accounts of $11,783 (credit balance). The company’s total sales during 2019 were $8,350,200. Of these, $1,252,530 were cash sales the rest were credit sales. By the end of the year, the company had collected $6,291,700 of accounts receivable. It also wrote off an account for $10,380. Prepare the journal entry for collections. Account Names DR CR Blank 1. Fill in the blank, read surrounding text. Blank 2. Fill in the blank, read surrounding text. Blank 3. Fill in the blank, read surrounding text. Blank 4. Fill in the blank, read surrounding text. Blank 5. Fill in the blank, read surrounding text. Blank 6. Fill in the blank, read surrounding text. Blank 7. Fill in the blank, read surrounding text. Blank 8. Fill in the blank, read surrounding text. Blank 9. Fill in the blank, read surrounding text. Blank 10. Fill in the blank, read surrounding text. Blank 11.…
The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2018, theallowance account had a credit balance of $75,000. Credit sales for 2018 totaled $2,400,000 and the year-endaccounts receivable balance was $490,000. During this year, $73,000 in receivables were determined to be uncollectible. Manda Panda anticipates that 3% of all credit sales will ultimately become uncollectible. The fiscal yearends on December 31.Required:1. Does this situation describe a loss contingency? Explain.2. What is the bad debt expense that Manda Panda should report in its 2018 income statement?3. Prepare the appropriate journal entry to record the contingency.4. What is the net accounts receivable value Manda Panda should report in its 2018 balance sheet?
On December 31, 2022, Ace Hardware reported the following information on its balance sheet: Accounts Receivable $1,350,000 Allowance for Doubtful Accounts (credit) 81,000 During 2023, the Company had the following transactions related to receivables: Sales on Account Collections on Account Write-offs of uncollectible accounts Recovery of previously written off accounts If bad debts are estimated to be 1.50% of credit sales, determine the ending balance in the Allowance for Doubtful Accounts after adjustment, at the end of 2023: Select one: O $4,500,000 4,275,000 90,000 18,000 a. $67,500 b. $94,500 c. $58,500 d. $76,500 e. $74,250
The statement of financial position of Larkspur Inc. at December 31, 2022, includes the following: Notes receivable Accounts receivable Less: Allowance for expected credit losses Transactions in 2023 include the following: 2. 3. $380,000 4. 282,700 1. Accounts receivable of $144,500 were collected. Customer accounts of $40,400 were written off during the year. In December, an additional $16,200 was received in payment of an account that was written off early in 2023. At year end, Allowance for Expected Credit Losses was estimated to need a balance of $52,400. This estimate is based on an analysis of aged accounts receivable. (47,200) $615,500
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During 2014, a company wrote off $6,000 in uncollectible accounts receivable. At the end of the year, they estimated bad debt expense using a percent of gross sales. In 2015, the company recovered a $1,000 account that was written off in 2014. The recording of this recovery would include a a. Debit to retained earnings b. Credit to accounts receivable c. Debit to allowance for doubtful accounts d. Credit to prior period adjustments
At January 1, 2015, Windy Mountain Flagpoles had accounts receivable of $30,000 and allowance for bad debts had a credit balance of $3,000. During the year, Windy Mountain Flagpoles recorded the following: Sales of $178,000 ($158,000 on account; $20,000 for cash) Collections on account, $124,000 Write-offs of uncollectible receivables, $2,800 Accounting for uncollectible accounts using the allowance method (percent-of-sales) and reporting receivables on the balance sheet Question 1 Requirements Journalize Windy's transaction that occurred during 2015. The company uses the allowance method. Post Windy's transaction to the account receivable and allowance for bad debts T-accounts Journalize Windy's adjustment to record bad debts expense assuming Windy estimate bad debts as 4% of credit sales. Post the adjustment to the appropriate T-accounts. Show how Windy Mountain Flagpoles will report net accounts receivable on its December 31, 2015 balance sheet. Question 2 Requirements Journalize…
A company’s year-end balance in accounts receivable is $2,600,000. The allowance for uncollectible accounts had a beginning-of-year credit balance of $42,000. An aging of accounts receivable at the end of the year indicates a required allowance of $50,000. If bad debt expense for the year was $52,000, and if credit sales for the year were $8,100,000, and $7,300,000 was collected from credit customers, what was the beginning-of-year balance in accounts receivable?
Innovative Tech Inc. (ITI) uses the percentage of credit sales method to estimate bad debts eachmonth and then uses the aging method at year-end. During November, ITI sold services on accountfor $100,000 and estimated that ½ of one percent of those sales would be uncollectible. At itsDecember 31 year-end, total Accounts Receivable is $89,000, aged as follows: (1) 1–30 days old,$75,000; (2) 31–90 days old, $10,000; and (3) more than 90 days old, $4,000. Experience hasshown that for each age group, the average rate of uncollectibility is (1) 10 percent, (2) 20 percent,and (3) 40 percent, respectively. Before the end-of-year adjusting entry is made, the Allowance forDoubtful Accounts has a $1,600 credit balance at December 31.Required:1. Prepare the November adjusting entry for bad debts.2. Prepare a schedule to estimate an appropriate year-end balance for the Allowance for Doubtful Accounts.3. Prepare the December 31 adjusting entry.4. Show how the various accounts related to accounts…
The Glass House, a glass and china store, sells nearly half its merchandise on credit. During the past 4 years, the following data were developed for credit sales and losses from uncollectible accounts: Required:1. Calculate the loss rate for each year from 2016 through 2018. (Note: Round answers to threedecimal places.)2. Determine whether there appears to be a significant change in the loss rate over time.3. CONCEPTUAL CONNECTION If credit sales for 2020 are $400,000, determine what loss rateyou would recommend to estimate bad debts. (Note: Round answers to three decimal places.)4. Using the rate you recommend, record bad debt expense for 2020.5. CONCEPTUAL CONNECTION Assume that the increase in The Glass House’s sales in2020 was largely due to granting credit to customers who would have been denied credit inprevious years. How would this change your answer to Requirement 4? Describe a legitimatebusiness…
Florence Company had a debit balance of $1,500 in the Allowance for Doubtful Accounts account and a debit balance of $500,000 in the Accounts Receivable account with Credit Sales of $1,500,000 for the year. Management estimates 1.5% of credit sales will become uncollectible. What is the amount of estimated bad debts expense?
Pincus Associates uses the allowance method to account for bad debts. During 2021, its first year of operations, Pincus provided a total of $239,000 of services on account. In 2021, the company wrote off uncollectible accounts of $9,600. By the end of 2021, cash collections on accounts receivable totaled $201,600. Pincus estimates that 10% of the accounts receivable balance at 12/31/2021 will prove uncollectible. Required:1. & 2. What journal entry did Pincus record to write off uncollectible accounts during 2021 and to recognize bad debt expense for 2021?