Tammany Professional Engineers uses the Percentage of Receivables method to account for bad debt. The following is a summary of Tammany’s Accounts Receivable Aging Report. Cash Sales $42,000 Credit Sales $21,000 Allowance for Uncollectible Accounts December 31, 2020 $4,375 Current > 30 >60 >90 $115,000 $98,000 $75,000 $15,000 Estimated Uncollectible 1% 2% 4% 5% Required: Prepare the total estimate of uncollectible accounts and give the amount of the required adjustment. Do not prepare a journal entry. Please show your work if possible. In addition to submitting your answer here, you should also write it down so you an use it for the next problem.
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.
Tammany Professional Engineers uses the Percentage of Receivables method to account for
Cash Sales $42,000
Credit Sales $21,000
Allowance for Uncollectible Accounts December 31, 2020 $4,375
|
|
Current |
> 30 |
>60 |
>90 |
|
|
$115,000 |
$98,000 |
$75,000 |
$15,000 |
|
Estimated Uncollectible |
1% |
2% |
4% |
5% |
|
|
|
|
|
|
Required: Prepare the total estimate of uncollectible accounts and give the amount of the required adjustment. Do not prepare a
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Using your calculations above, prepare a
journal entry to adjust the allowance account. Even if you feel that your calculations are incorrect, use the appropriate results of your calculation for the journal entry.
by Bartleby Expert
