The aging of accounts receivable is used to estimate the allowance for uncollectible. This method uses both past and current information for the estimation of allowance amount. Under this, receivables are classified according to their age. The age of a receivable is an equal number of days since sales have been made to the customer. The aging of the accounts receivable schedule and ascertain the allowance for doubtful debts.

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Chapter 7, Problem 16E

1.

To determine

Concept Introduction: The aging of accounts receivable is used to estimate the allowance for uncollectible. This method uses both past and current information for the estimation of allowance amount. Under this, receivables are classified according to their age. The age of a receivable is an equal number of days since sales have been made to the customer.

The aging of the accounts receivable schedule and ascertain the allowance for doubtful debts.

2.

To determine

Concept Introduction: The allowance method uses allowance for a doubtful account for write-offs. Under this, bad debt written off is recognized only when a specific account is uncollectable. Whereas the allowance method of accounting for bad debts estimates loss from uncollectible because when sales occur sellers do not know which customer will not pay their bills.

The year-end adjustment entry to record bad debts assuming allowance for a doubtful account has an unadjusted balance of $100 credit.

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The following data were selected from the records of Fluwars Company for the year ended December 31, current year: Balances at January 1, current year: Accounts receivable (various customers) $ 111,500 Allowance for doubtful accounts 11,200 The company sold merchandise for cash and on open account with credit terms 1/10, n/30, without a right of return. The following transactions occurred during the current year: Sold merchandise for cash, $252,000. Sold merchandise to Abbey Corp; invoice amount, $36,000. Sold merchandise to Brown Company; invoice amount, $47,600. Abbey paid the invoice in (b) within the discount period. Sold merchandise to Cavendish Inc.; invoice amount, $50,000. Collected $113,100 cash from customers for credit sales made during the year, all within the discount periods. Brown paid its account in full within the discount period. Sold merchandise to Decca Corporation; invoice amount, $42,400. Cavendish paid its account in full after the…

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The following data were selected from the records of Fluwars Company for the year ended December 31, current year: Balances at January 1, current year: Accounts receivable (various customers) $ 111,500 Allowance for doubtful accounts 11,200 The company sold merchandise for cash and on open account with credit terms 1/10, n/30, without a right of return. The following transactions occurred during the current year: Sold merchandise for cash, $252,000. Sold merchandise to Abbey Corp; invoice amount, $36,000. Sold merchandise to Brown Company; invoice amount, $47,600. Abbey paid the invoice in (b) within the discount period. Sold merchandise to Cavendish Inc.; invoice amount, $50,000. Collected $113,100 cash from customers for credit sales made during the year, all within the discount periods. Brown paid its account in full within the discount period. Sold merchandise to Decca Corporation; invoice amount, $42,400. Cavendish paid its account in full after the…