The Northrock Corporation produced the following summary of its historical experience of write offs of Accounts Receivable (A/R) on October 31, 2021: | A/R at Year end | 14000 Uncollectible and written off in subsequent years | 700 Year 2018 2019 10000 1000 2020 12000 600 2021 4000 200 Required 1. Calculate the percentage loss on Accounts Receivable for the period 2018 to 2021 by calculating total write offs over the period as a % of total A/R. Round your calculation to two decimal places. 2. Compute the balance for the Allowance for Doubtful accounts (rounded to the nearest $) on October 31, 2021 if Accounts Receivable on that date were 16000. Apply the % ending A/R method using the percentage calculated in part 1. 3. Scenario A: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 160 credit. Prepare an adjusting entry to obtain the amount that you calculated in part 2. 4. Scenario B: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 2000 credit. Prepare an adjusting entry to obtain the amount that you calculated in part 2. 5. Scenario C: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 2000 debit. Prepare an adjusting entry to obtain the amount that you calculated in part 2.
The Northrock Corporation produced the following summary of its historical experience of write offs of Accounts Receivable (A/R) on October 31, 2021: | A/R at Year end | 14000 Uncollectible and written off in subsequent years | 700 Year 2018 2019 10000 1000 2020 12000 600 2021 4000 200 Required 1. Calculate the percentage loss on Accounts Receivable for the period 2018 to 2021 by calculating total write offs over the period as a % of total A/R. Round your calculation to two decimal places. 2. Compute the balance for the Allowance for Doubtful accounts (rounded to the nearest $) on October 31, 2021 if Accounts Receivable on that date were 16000. Apply the % ending A/R method using the percentage calculated in part 1. 3. Scenario A: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 160 credit. Prepare an adjusting entry to obtain the amount that you calculated in part 2. 4. Scenario B: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 2000 credit. Prepare an adjusting entry to obtain the amount that you calculated in part 2. 5. Scenario C: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 2000 debit. Prepare an adjusting entry to obtain the amount that you calculated in part 2.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Bad Debts
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
Transcribed Image Text:Problem 6-4: The Northrock Corporation
The Northrock Corporation produced the following summary of its historical experience of write offs of Accounts Receivable (A/R) on
October 31, 2021:
Year
A/R at Year end
Uncollectible and written off in subsequent years
2018
14000
700
2019
10000
1000
2020
12000
600
2021
4000
200
Required
1. Calculate the percentage loss on Accounts Receivable for the period 2018 to 2021 by calculating total write offs over the period as a % of
total A/R. Round your calculation to two decimal places.
2. Compute the balance for the Allowance for Doubtful accounts (rounded to the nearest $) on October 31, 2021 if Accounts Receivable on
that date were 16000. Apply the % ending A/R method using the percentage calculated in part 1.
3. Scenario A: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 160 credit. Prepare an adjusting entry to obtain the
amount that you calculated in part 2.
4. Scenario B: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 2000 credit. Prepare an adjusting entry to obtain
the amount that you calculated in part 2.
5. Scenario C: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 2000 debit. Prepare an adjusting entry to obtain the
amount that you calculated in part 2.
Upon completion, enter the following data here (enter a credit to bad debt
expense as negative):
Percent losses (round to nearest integer)
Balance for Allow. Doubtful
Bad Debt Expense (Case 1)
Bad Debt Expense (Case 2)
Bad Debt Expense (Case 3)
submit
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