Cengagenowv2, 1 Term Printed Access Card For Wahlen/jones/pagach’s Intermediate Accounting: Reporting And Analysis, 2017 Update, 2nd
2nd Edition
ISBN: 9781337912259
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 6, Problem 13E
To determine
Calculate the balance in the Company M’s allowance for doubtful accounts by preparing a schedule.
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Jarden Company has credit sales of $3,600,000 for year 2017. On December 31, 2017, the company's Allowance for
Doubtful Accounts has an unadjusted credit brence of $14,500. Jarden prepares a schedule of its December 31, 2017,
accounts receivable by age. On the basis of pust experience, it estimates the percent of receivables in each age category
that will become uncollectible. This information is summarized here.
Expected Percent
December 31, 2017
Accounts Receivable.
$830,000
254,000
86,000
38,000
12,000
Accounts
receivable
Required:
1. Estimate the required balance of the Allowance for Doubtful Accounts at December 31, 2017, using the aging of accounts rece
method.
X
Not due:
1 to 30
31 to 60:
61 to 90:
Over 90:
Estimated balance of allowance for uncollectibles
x
X
Age of
Accounts Receivable
Not yet due
1 to 30 days past due
31 to 60 days past due
61 to 90 days past due
Over 90 days past due
X
X
Percent uncollectible
(#.##%)
#
Uncollectible
1.25%
2.00
6.50
32.75
68.00
Estimated…
At the beginning of 2017, EZ Tech Company's Accounts Receivable balance was $143,000, and the balance in Allowance for Doubtful Accounts was $2,450. EZ Tech's sales in 2017 were $1,070,000, 80% of which were on credit. Collections on account during the year were $690,000. The company wrote off $4,000 of uncollectible accounts during the year.
Identify and analyze the transactions related to the collections of cash during 2017.
Activity
Operating
Accounts
Cash Increase, Accounts Receivable Decrease
Statement(s)
Balance Sheet only
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
Balance Sheet
Income Statement
Stockholders'
Net
Assets
=
Liabilities
+
Equity
Revenues
–
Expenses
=
Income…
The Manda Panda Company uses the allowance method to account for bad debts. At the beginning of 2016, the allowance account had a credit balance of $75,000. Credit sales for 2016 totaled $2,400,000 and the year-end accounts 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 year ends 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 2016 income statement? 3. Prepare the appropriate journal entry to record the contingency. 4. What is the net realizable value (book value) Manda Panda should report in its 2016 balance sheet?
Chapter 6 Solutions
Cengagenowv2, 1 Term Printed Access Card For Wahlen/jones/pagach’s Intermediate Accounting: Reporting And Analysis, 2017 Update, 2nd
Ch. 6 - What are the components of cash? What items may be...Ch. 6 - Prob. 2GICh. 6 - Prob. 3GICh. 6 - How are trade receivables different from nontrade...Ch. 6 - Prob. 5GICh. 6 - Prob. 6GICh. 6 - Prob. 7GICh. 6 - What is a sales return? A sales allowance?...Ch. 6 - Discuss the differences between the allowance...Ch. 6 - Prob. 10GI
Ch. 6 - Prob. 11GICh. 6 - What method of bad debt estimation categorizes...Ch. 6 - Why does the write-off of uncollectible accounts...Ch. 6 - Discuss the difference between a secured borrowing...Ch. 6 - When does a company record the transfer of...Ch. 6 - Prob. 16GICh. 6 - What is a non-interest-bearing note? How does...Ch. 6 - Prob. 18GICh. 6 - How are the cash proceeds determined when a note...Ch. 6 - Under IFRS, what criteria must be satisfied in...Ch. 6 - Prob. 21GICh. 6 - (Appendix 6. 1) What is the purpose of a petty...Ch. 6 - (Appendix 6. 7) Why are actual expenses, rather...Ch. 6 - Prob. 24GICh. 6 - Prob. 25GICh. 6 - Prob. 1MCCh. 6 - Prob. 2MCCh. 6 - A company is in its first year of operations and...Ch. 6 - Prob. 4MCCh. 6 - Prob. 5MCCh. 6 - Prob. 6MCCh. 6 - A method of estimating bad debts that focuses on...Ch. 6 - When the accounts receivable of a company are sold...Ch. 6 - Prob. 9MCCh. 6 - Prob. 10MCCh. 6 - Prob. 11MCCh. 6 - On December 31, Harrison Company reports the...Ch. 6 - Lindley Enterprises sells hand woven rugs. Paige...Ch. 6 - Long Corporation is a fabric manufacturing...Ch. 6 - Prob. 4RECh. 6 - Prob. 5RECh. 6 - Prob. 6RECh. 6 - Prob. 7RECh. 6 - On December 1 of the current year, Jordan Inc....Ch. 6 - On December 1 of the current year, Jordan Inc....Ch. 6 - On December 1, Newton Enterprises sells 100,000 of...Ch. 6 - Kaseys Cake Shop made 20,000 in sales of wedding...Ch. 6 - On June 1, Phillips Corporation sold, with...Ch. 6 - Prob. 13RECh. 6 - Prob. 1ECh. 6 - Prob. 2ECh. 6 - Journal Entry to Separate Receivables An...Ch. 6 - Prob. 4ECh. 6 - Prob. 5ECh. 6 - Prob. 6ECh. 6 - Prob. 7ECh. 6 - Prob. 8ECh. 6 - Prob. 9ECh. 6 - Aging Analysis of Accounts Receivable Cowens, a...Ch. 6 - Bradford Companys accounting records on December...Ch. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Prob. 14ECh. 6 - Transfer of Accounts Receivable Inder Corporation...Ch. 6 - Prob. 16ECh. 6 - Prob. 17ECh. 6 - Computing the Proceeds from the Sale of Notes...Ch. 6 - Recording the Sale of Notes Receivable Singer...Ch. 6 - Prob. 20ECh. 6 - Prob. 21ECh. 6 - Prob. 22ECh. 6 - Prob. 23ECh. 6 - Prob. 24ECh. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Prob. 3PCh. 6 - Prob. 4PCh. 6 - From inception of operations to December 31, 2015,...Ch. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Prob. 8PCh. 6 - Prob. 9PCh. 6 - Prob. 10PCh. 6 - Factoring and Assignment of Accounts Receivable...Ch. 6 - Recording Note Transactions The following...Ch. 6 - Notes Receivable Transactions The following notes...Ch. 6 - Prob. 14PCh. 6 - Prob. 15PCh. 6 - Prob. 16PCh. 6 - Prob. 17PCh. 6 - Prob. 18PCh. 6 - Prob. 19PCh. 6 - Prob. 1CCh. 6 - Prob. 2CCh. 6 - Bad Debt Expense When a company has a policy of...Ch. 6 - Prob. 4CCh. 6 - Prob. 5CCh. 6 - Components of Cash Cash is an important asset of a...Ch. 6 - Prob. 7CCh. 6 - Transfer of Accounts and Notes Receivable Tidal...Ch. 6 - Prob. 9CCh. 6 - Prob. 10CCh. 6 - Researching GAAP Situation Hamilton Company...
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- Bristax Corporation recorded $1,385,660 in credit sales for the year, and $732,410 in accounts receivable. The uncollectible percentage is 3.1% for the income statement method and 4.5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $20,550; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $17,430; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.arrow_forwardInk Records recorded $2,333,898 in credit sales for the year and $1,466,990 in accounts receivable. The uncollectible percentage is 3% for the income statement method and 5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $20,254; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.arrow_forwardAllowance Method for Accounting for Bad Debts At the beginning of 2016, EZ Tech Companys Accounts Receivable balance was $140,000, and the balance in Allowance for Doubtful Accounts was $2,350 (Cr.). EZ Techs sales in 2016 were $1,050,000, 80% of which were on credit. Collections on account during the year were $670,000. The company wrote off $4,000 of uncollectible accounts during the year. Required Prepare summary journal entries related to the sale, collections, and write-offs of accounts receivable during 2016. Prepare journal entries to recognize bad debts assuming that (a) bad debts expense is 3% of credit sales and (b) amounts expected to be uncollectible are 6% of the year-end accounts receivable. What is the net realizable value of accounts receivable on December 31, 2016, under each assumption in part (2)? What effect does the recognition of bad debts expense have on the net realizable value? What effect does the write-off of accounts have on the net realizable value?arrow_forward
- Berry Farms has an accounts receivable balance at the end of 2018 of $425,650. The net credit sales for the year are $924,123. The balance at the end of 2017 was $378,550. What is the number of days sales in receivables ratio for 2018 (round all answers to two decimal places)?arrow_forwardOn December 31, 2016, Vesta Company’s accounts receivable balance was of $1,200,000, and an analysis of their accounts receivable suggests that the Allowance for Doubtful Accounts should be 2% of accounts receivable. The balance in the Allowance for Doubtful Accounts on January 1, 2016 was $23,880 (credit). During the year 2016, Triton wrote off $25,800 of bad debts. What amount should be reported as the Bad debt expense for the year 2016? A) $24,800 B) $25,920 C) $24,000 D) $22,080arrow_forwardManchester Company provided the following accounts abstracted from the unadjusted trial balance on December 31, 2014: Accounts receivable: 5,000,000 Debit Allowance for doubtful accounts: 40,000 Credit Net credit sales: 20,000,000 Credit The entity estimated that 3% of the gross accounts receivable will become uncollectible. What amount should be recognized as doubtful accounts expense for 2014?arrow_forward
- At the beginning of 2017, EZ Tech Company's Accounts Receivable balance was $241,000, and the balance in Allowance for Doubtful Accounts was $4,100. EZ Tech's sales in 2017 were $1,810,000, 70% of which were on credit. Collections on account during the year were $1,160,000. The company wrote off $7,000 of uncollectible accounts during the year. I have to determine the cash and accounts receivable / stockholders' equity. I have worked the solutions and still unable to get the correct answer.arrow_forwardAt the end of the annual reporting period, the accounts of Berry Company showed the following information: a. Sales Revenue for 2015, P180,000 of which one sixth was on credit. b. Allowance for doubtful accounts, balance January 1, 2015, P900 credit. c. Accounts receivable, balance December 31, 2015 ( prior to the write-off of uncollectible accounts during 2015), P18,050. d. Uncollectible accounts to be written off, December 31, 2015, P1,050. e. Aging schedule at December 31, 2015, showing the following breakdown of total accounts receivable: Status Amount % Uncollectible Not past due P10,000 .5% Past due 1-60 days 4,000 1% Past due over 60 days 3,000 8% Question: 1. During 2015, how much of the accounts receivable was collected? a. P12,500 b. P11,950 c. P10,950 d. P11,000 2. On total receivables at year-end, using the aging of accounts receivable, what is the entry to record bad debts expense ? a. Debit Bad debts expense 330; credit Allowance for bad debts 330…arrow_forwardClark Company estimated the net realizable value of its accounts receivable as of December 31, 2016, to be $165,000, based on an aging schedule of accounts receivable. Clark has also provided the following information: • The accounts receivable balance on December 31, 2016 was $175,000.• Uncollectible accounts receivable written off during 2016 totaled $12,000.• The allowance for doubtful accounts balance on January 1, 2016 was $15,000. How much is Clark's 2016 bad debt expense? Answer: is 7,000 how do you get this?arrow_forward
- Novak Corp. has accounts receivable of $90,300 at March 31, 2017. Credit terms are 2/10, n/30. At March 31, 2017, there is a $2,284 credit balance in Allowance for Doubtful Accounts prior to adjustment. The company uses the percentage-of-receivables basis for estimating uncollectible accounts. The company’s estimates of bad debts are as shown below. Balance, March 31 Estimated PercentageUncollectible Age of Accounts 2017 2016 Current $61,700 $74,140 2 % 1–30 days past due 12,600 8,520 5 31–90 days past due 9,200 2,260 28 Over 90 days past due 6,800 1,160 49 $90,300 $86,080 Determine the total estimated uncollectibles. The total estimated uncollectibles $Enter a dollar amount Prepare the adjusting entry at March 31, 2017, to record bad debt expense. (Credit account…arrow_forwardThe following information is extracted from Shelton Corporation’s accounting records at the beginning of 2016: Accounts Receivable $63,000 Allowance for Doubtful Accounts 1,400 (credit) During 2016, sales on credit amounted to $575,000, $557,400 was collected on outstanding receivables and $2,600 of receivables were written off as uncollectible. On December 31, 2016, Shelton estimates its bad debts to be 4% of the outstanding gross accounts receivable balance. Required: 1. Prepare the journal entry necessary to record Shelton’s estimate of bad debt expense for 2016. 2. Prepare the Accounts Receivable section of Shelton’s December 31, 2016, balance sheet. 3. Compute Shelton’s receivables turnover. (Round to one decimal place.) 4. If Sheldon uses IFRS, what might be the heading for the accounts receivable section in Requirement 2?arrow_forwardThe following information is extracted from Shelton Corporation’s accounting records at the beginning of 2016: Accounts Receivable $64,000 Allowance for Doubtful Accounts 1,100 (credit) During 2016, sales on credit amounted to $568,000, $559,000 was collected on outstanding receivables and $2,500 of receivables were written off as uncollectible. On December 31, 2016, Shelton estimates its bad debts to be 4% of the outstanding gross accounts receivable balance. 1. Prepare the journal entry necessary to record Shelton’s estimate of bad debt expense for 2016. 2. Prepare the Accounts Receivable section of Shelton’s December 31, 2016, balance sheet. 3. Compute Shelton’s receivables turnover. (Round to one decimal place.)arrow_forward
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