Financial Accounting, 8th Edition
8th Edition
ISBN: 9780078025556
Author: Robert Libby, Patricia Libby, Daniel Short
Publisher: McGraw-Hill Education
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Chapter 6, Problem 5ME
a.
To determine
Indicate the amount and direction of effects of write-off and
b.
To determine
Indicate the amount and direction of effects of write-off and bad debt expense on the financial statement accounts and on the overall
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Please do not give solution in image format and give solution in Step by step and give calculations...
1. How much should be reported as bad debts expense for the year ended December 31, 2020?
2. What is the net realizable value of the Accounts receivables on December 31, 2020?
Under the allowance method, Bad Debts Expense is recorded
a. when an individual account is written off.
b. when the loss amount is known.
22.
for an amount that the company estimates it will not collect.
C.
d. several times during the accounting period.
Chapter 6 Solutions
Financial Accounting, 8th Edition
Ch. 6 - Prob. 1QCh. 6 - What is gross profit or gross margin on sales? In...Ch. 6 - What is a credit card discount? How does it affect...Ch. 6 - Prob. 4QCh. 6 - Prob. 5QCh. 6 - Differentiate accounts receivable from notes...Ch. 6 - Which basic accounting principle is the allowance...Ch. 6 - Using the allowance method, is bad debt expense...Ch. 6 - Prob. 9QCh. 6 - Prob. 10Q
Ch. 6 - Prob. 11QCh. 6 - Prob. 12QCh. 6 - Prob. 13QCh. 6 - Prob. 14QCh. 6 - Briefly explain how the total amount of cash...Ch. 6 - Prob. 16QCh. 6 - Sales discounts with terms 2/10, n/30 mean: a. 10...Ch. 6 - Gross sales total 300,000, one-half of which were...Ch. 6 - A company has been successful in reducing the...Ch. 6 - When a company using the allowance method writes...Ch. 6 - You have determined that Company X estimates bad...Ch. 6 - Prob. 6MCQCh. 6 - Which of the following is not a step toward...Ch. 6 - When using the allowance method, as bad debt...Ch. 6 - Which of the following best describes the proper...Ch. 6 - Prob. 10MCQCh. 6 - Prob. 1MECh. 6 - Prob. 2MECh. 6 - Prob. 3MECh. 6 - Recording Bad Debts Prepare journal entries for...Ch. 6 - Prob. 5MECh. 6 - Determining the Effects of Credit Policy Changes...Ch. 6 - Prob. 7MECh. 6 - Prob. 8MECh. 6 - Prob. 1ECh. 6 - Reporting Net Sales with Credit Sales, Sales...Ch. 6 - Prob. 3ECh. 6 - Determining the Effects of Credit Sales, Sales...Ch. 6 - Prob. 5ECh. 6 - Prob. 6ECh. 6 - Prob. 7ECh. 6 - Prob. 8ECh. 6 - Prob. 9ECh. 6 - Prob. 10ECh. 6 - Prob. 11ECh. 6 - Prob. 12ECh. 6 - Prob. 13ECh. 6 - Inferring Bad Debt Write-Offs and Cash Collections...Ch. 6 - Inferring Bad Debt Write-Offs and Cash Collections...Ch. 6 - Prob. 16ECh. 6 - Prob. 17ECh. 6 - Prob. 18ECh. 6 - Prob. 19ECh. 6 - Prob. 20ECh. 6 - Interpreting tho Effects of Salos Declines and...Ch. 6 - Prob. 22ECh. 6 - Prob. 23ECh. 6 - Prob. 24ECh. 6 - Prob. 1PCh. 6 - Prob. 2PCh. 6 - Recording Bad Debts and Interpreting Disclosure of...Ch. 6 - Determining Bad Debt Expense Based on Aging...Ch. 6 - Prob. 5PCh. 6 - Prob. 6PCh. 6 - Prob. 7PCh. 6 - Prob. 8PCh. 6 - Prob. 1APCh. 6 - Prob. 2APCh. 6 - Determining Bad Debt Expense Based on Aging...Ch. 6 - Prob. 4APCh. 6 - Prob. 5APCh. 6 - Prob. 1CPCh. 6 - Prob. 2CPCh. 6 - Prob. 3CPCh. 6 - Prob. 4CPCh. 6 - Prob. 5CPCh. 6 - Prob. 6CPCh. 6 - Prob. 1CC
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- What information can best be elicited from a receivable ratio? A. company performance with current debt collection B. credit extension effect on cash sales C. likelihood of future customer bankruptcy filings D. an increase in future credit sales to current customersarrow_forwardRacing Adventures records bad debt using the allowance, income statement method. They recorded $134,560 in accounts receivable for the year and $323,660 in credit sales. The uncollectible percentage is 6.8%. What is the bad debt estimation for the year using the income statement method?arrow_forwardWhich of the following would be included in the financing section? A. loss on sale of investments B. depreciation expense C. increase in notes receivable D. decrease in notes payablearrow_forward
- The following accounts receivable information pertains to Luxury Cruises. A. Determine the estimated uncollectible bad debt for Luxury Cruises in 2018 using the balance sheet aging of receivables method. B. Record the year-end 2018 adjusting journal entry for bad debt. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $187,450; record the year-end entry for bad debt, taking this into consideration. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $206,770; record the year-end entry for bad debt, taking this into consideration. E. On January 24, 2019, Luxury Cruises identifies Landon Walkers account as uncollectible in the amount of $4,650. Record the entry for identification.arrow_forwardEstimating Bad Debts Keegan Corporations accounting records disclosed the following information for 2019: Keegan wishes to examine the effect of various alternative had debt estimation policies. Required: 1. Prepare the adjusting entry that would be required under each of the following methods: a. Bad debts are estimated at 3% of net credit sales. b. Bad debts are estimated at 7.5% of gross accounts receivable. c. An aging of accounts receivable indicates that half of the outstanding accounts will incur a 3% loss, a quarter will incur a 6% loss, the remaining quarter will incur a 20% loss. 2. Next Level Discuss the difference between the income statement and balance sheet approaches to estimating bad debts.arrow_forwardEach time an account is written off under the direct write-off method, Bad Debt Expense is debited.arrow_forward
- Earrings Depot records bad debt using the allowance, balance sheet method. They recorded $97,440 in accounts receivable for the year and $288,550 in credit sales. The uncollectible percentage is 5.5%. What is the bad debt estimation for the year using the balance sheet method?arrow_forwardConner Pride reports year-end credit sales in the amount of $567,000 and accounts receivable of $134,000. Conner uses the balance sheet method to report bad debt estimation. The estimation percentage is 4.6%. What is the estimated balance uncollectible using the balance sheet method? A. $26,082 B. $6,164 C. $260,820 D. $61,640arrow_forwardAnalyze the following accounts and satisfy the requirements given below. Accounts payable Accrued expenses Accumulated depreciation Additional paid-in capital Allowance for doubtful accounts Cash Common stock (PO.20 par) Gross accounts receivable Gross fixed assets Inventories Long term debt Net accounts receivable Net fixed assets Retained earnings Short-term bank loan (notes payable) P 39,000 8,000 51,000 86,000 2,000 23,000 45,000 40,000 486,000 54,000 210,000 38,000 435,000 138,000 24,000arrow_forward
- Recording Entries to Estimate Bad Debt Expense Including the Write-Off and Subsequent Collection of an Account Following are accounts of Long Company at its December 31 year-end for the current year. $25,500 Accounts receivable balance, December 31, prior year Allowance for doubtful accounts balance, December 31, prior year Total sales revenue during the current year (1/6 are on credit) Uncollectible account written off during the current year (A. Smith) Cash collected on accounts receivable during the current year 1,500 480,000 500 85,000 Required Recording Write-off b. Prepare the entry to record bad debt expense for each of the following three cases. • Note: Treat each case separately. 1. Bad debt losses assume 1% of credit sales. Date Dec. 31 Bad Debt Expense Allowance for Doubtful Accounts To record bad debt Recording Bad Debt Expense Account Name Date Dec. 31 Bad Debt Expense Age Less than 30 days 31-90 days Account Name Allowance for Doubtful Accounts To record bad debt 91-120…arrow_forward(Balance Sheet Classification of Various Liabilities) How would each of the following items be reported on the balance sheet?arrow_forwardDiscuss the different methods available to account for bad debts. Assume that you have a company. And the management estimates that 2.5% of sales will be uncollectible. Provide an amount of sales and prepare the journal entry using the percent of sales method (-arrow_forward
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