LO 5 (Learning Objective 5: Evaluate collectibility using the allowance for uncollectible accounts) At the end of the current year (before adjusting entries ). Autumn corporation had a balance of $76,000 In Accounts Receivable and a credit balance of $11,000 In Allowance for uncollectible Accounts. Service revenue (all on credit) for the year totaled $490,000. Requirements Consider each of the following two independent situations. 1. Using the percent-of-sales method, calculate the amount of Uncollectible-Account Expense if Autumn Corporation estimates its uncollectible-account expense using a rate of 2% of credit sales. What is the ending balance of the Allowance for Uncollectible-Accounts under this scenario? 2. Now assume that Autumn Corporation uses the aging-of-receivables method. Autumn Corporation estimates that its Allowance for Uncollectible Accounts should have a credit balance of $21,000. Calculate the amount of its Uncollectible-Account Expense. What is the ending balance of the Allowance for Uncollectible Accounts under this scenario?
LO 5 (Learning Objective 5: Evaluate collectibility using the allowance for uncollectible accounts) At the end of the current year (before adjusting entries ). Autumn corporation had a balance of $76,000 In Accounts Receivable and a credit balance of $11,000 In Allowance for uncollectible Accounts. Service revenue (all on credit) for the year totaled $490,000. Requirements Consider each of the following two independent situations. 1. Using the percent-of-sales method, calculate the amount of Uncollectible-Account Expense if Autumn Corporation estimates its uncollectible-account expense using a rate of 2% of credit sales. What is the ending balance of the Allowance for Uncollectible-Accounts under this scenario? 2. Now assume that Autumn Corporation uses the aging-of-receivables method. Autumn Corporation estimates that its Allowance for Uncollectible Accounts should have a credit balance of $21,000. Calculate the amount of its Uncollectible-Account Expense. What is the ending balance of the Allowance for Uncollectible Accounts under this scenario?
Solution Summary: The author calculates the ending balance of the allowance for uncollectible accounts under percent of sales method.
(Learning Objective 5: Evaluate collectibility using the allowance for uncollectible accounts) At the end of the current year (before adjusting entries). Autumn corporation had a balance of $76,000 In Accounts Receivable and a credit balance of $11,000 In Allowance for uncollectible Accounts.
Service revenue (all on credit) for the year totaled $490,000.
Requirements
Consider each of the following two independent situations.
1. Using the percent-of-sales method, calculate the amount of Uncollectible-Account Expense if Autumn Corporation estimates its uncollectible-account expense using a rate of 2% of credit sales. What is the ending balance of the Allowance for Uncollectible-Accounts under this scenario?
2. Now assume that Autumn Corporation uses the aging-of-receivables method. Autumn Corporation estimates that its Allowance for Uncollectible Accounts should have a credit balance of $21,000. Calculate the amount of its Uncollectible-Account Expense. What is the ending balance of the Allowance for Uncollectible Accounts under this scenario?
Definition Definition Money that the business will be receiving from its clients who have utilized the credit provided to buy its goods and services. The credit period typically lasts for a short term, lasting from a few days, a few months, to a year.
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Oriole Company sells product 2005WSC for $55 per unit and uses the LIFO method. The cost of one unit of 2005WSC is $52, and the replacement cost is $51. The estimated cost to dispose of a unit is $6, and the normal profit is 40% of selling price. At what amount per unit should product 2005WSC be reported, applying lower-of-cost-or-market?
Chapter 5 Solutions
Financial Accounting (12th Edition) (What's New in Accounting)
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