FINANCIAL AND MANAGERIAL ACCOUNTING
9th Edition
ISBN: 2818440048890
Author: Wild
Publisher: MCG CUSTOM
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Chapter 7, Problem 7QS
1.
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 determined to be uncollectable. Whereas the allowance method of accounting for
The realizable value of
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 determined to be 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 realizable value of accounts receivable after the write-off.
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Students have asked these similar questions
Timmons Company had a January 1 credit balance in its Allowance for Doubtful Accounts of $7,000 for the current year. The following transactions and events affected the Allowance for Doubtful Accounts during the current year:
Apr. 15
Bard’s account receivable of $5,700 was deemed un-collectable.
July 1
Drake paid the full amount of a previously written-off account receivable. This receivable of $2,300 had been written off in the prior year.
Dec. 31
Bad debts expense of $7,500 was recorded.
What amount should appear in the allowance for doubtful accounts in the December 31 balance sheet for the current year?
At its fiscal year end, under the aging of a company's accounts receivable, the uncollectible accounts are
estimated to be $12,000. The unadjusted balance for the Allowance for Doubtful Accounts is $2,000 credit.
Assume the company records adjusting entries only at year end.
What is the balance in the Allowance for Doubtful Accounts account after adjustment?
A. $14,000
B. $12,000
O C. $10,000
D. $2,000
A company has the following unadjusted account balance at December 31 of the current year: Allowance for Doubtful Accounts of $3,400 (debit balance). This company uses the aging of accounts receivable to estimate its bad debts. The following aging schedule reflects its accounts receivable at the current year end:
Account Age
Balance
Estimated uncollected Percentage
Current (not yet due)
$396,400
2.0%
1-30 days past due
277,800
4.0
31-60 days past due
48,000
8.5
61-90 days past due
6,600
39.0
Over 90 days past due
2,800
82.0
Total
$731,600
Calculate the amount of Allowance for Doubtful Accounts that should appear on the December 31, of the current year, balance sheet. Show your work here.
Prepare the adjusting journal entry to record the bad debts expense for the current year into the general journal.
Chapter 7 Solutions
FINANCIAL AND MANAGERIAL ACCOUNTING
Ch. 7 - Prob. 1QSCh. 7 - Prob. 2QSCh. 7 - Prob. 3QSCh. 7 - QS 7-4 Distinguishing between allowance method and...Ch. 7 - Prob. 5QSCh. 7 - Prob. 6QSCh. 7 - Prob. 7QSCh. 7 - Prob. 8QSCh. 7 - Prob. 9QSCh. 7 - Prob. 10QS
Ch. 7 - Prob. 11QSCh. 7 - Prob. 12QSCh. 7 - Prob. 13QSCh. 7 - Prob. 14QSCh. 7 - Prob. 15QSCh. 7 - Prob. 16QSCh. 7 - Prob. 17QSCh. 7 - Prob. 18QSCh. 7 - Prob. 19QSCh. 7 - Prob. 20QSCh. 7 - Prob. 21QSCh. 7 - Prob. 1ECh. 7 - Prob. 2ECh. 7 - Prob. 3ECh. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - Prob. 7ECh. 7 - Prob. 8ECh. 7 - Prob. 9ECh. 7 - Prob. 10ECh. 7 - Prob. 11ECh. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Prob. 14ECh. 7 - Prob. 15ECh. 7 - Prob. 16ECh. 7 - Prob. 17ECh. 7 - Prob. 18ECh. 7 - Prob. 19ECh. 7 - Prob. 20ECh. 7 - Prob. 21ECh. 7 - Prob. 22ECh. 7 - Prob. 23ECh. 7 - Prob. 1PSACh. 7 - Prob. 2PSACh. 7 - Prob. 3PSACh. 7 - Prob. 4PSACh. 7 - Prob. 5PSACh. 7 - Prob. 1PSBCh. 7 - Prob. 2PSBCh. 7 - Prob. 3PSBCh. 7 - Prob. 4PSBCh. 7 - Prob. 5PSBCh. 7 - Prob. 7SPCh. 7 - Prob. 1.1AACh. 7 - Prob. 1.2AACh. 7 - Prob. 1.3AACh. 7 - Prob. 1.4AACh. 7 - Prob. 2.1AACh. 7 - Prob. 2.2AACh. 7 - Prob. 3.1AACh. 7 - Prob. 3.2AACh. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Anton Blair is the manager of a medium-size...Ch. 7 - Prob. 2BTNCh. 7 - Prob. 3BTNCh. 7 - Prob. 4BTNCh. 7 - Prob. 5BTN
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- Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: a. Journalize the write-offs under the direct write-off method. b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded 5,250,000 of credit sales during the year. Based on past history and industry averages, % of credit sales are expected to be uncollectible. c. How much higher (lower) would Casebolt Companys net income have been under the direct write-off method than under the allowance method?arrow_forwardUNCOLLECTIBLE ACCOUNTSPERCENTAGE OF SALES AND PERCENTAGE OF RECEIVABLES At the end of the current year, the accounts receivable account of Parkers Nursery Supplies has a debit balance of 350,000. Credit sales are 2,300,000. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated uncollectible accounts. Assume the following independent conditions existed prior to the adjustment: 1. Allowance for Doubtful Accounts has a credit balance of 1,920. (a) The percentage of sales method is used and bad debt expense is estimated to be 1% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 24,560 in uncollectible accounts. 2. Allowance for Doubtful Accounts has a debit balance of 1,280. (a) The percentage of sales method is used and bad debt expense is estimated to be of 1% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 22,440 in uncollectible accounts.arrow_forwardUNCOLLECTIBLE ACCOUNTSPERCENTAGE OF SALES AND PERCENTAGE OF RECEIVABLES At the end of the current year, the accounts receivable account of Glenns Nursery Supplies has a debit balance of 390,000. Credit sales are 2,800,000. Record the end-of-period adjusting entry on December 31, in general journal form, for the estimated uncollectible accounts. Assume the following independent conditions existed prior to the adjustment: 1. Allowance for Doubtful Accounts has a credit balance of 1,760. (a) The percentage of sales method is used and bad debt expense is estimated to be 1% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 30,330 in uncollectible accounts. 2. Allowance for Doubtful Accounts has a debit balance of 1,900. (a) The percentage of sales method is used and bad debt expense is estimated to be of 1% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 29,890 in uncollectible accounts.arrow_forward
- Olena Mirrors records bad debt using the allowance, balance sheet method. They recorded $343,160 in accounts receivable for the year and $577,930 in credit sales. The uncollectible percentage is 4.4%. On June 11, Olena Mirrors identifies one uncollectible account from Nadia White in the amount of $4,265. On September 14, Nadia Chernoff unexpectedly pays $1,732 toward her account. Record journal entries for the following. A. Year-end adjusting entry for 2017 bad debt B. June 11, 2018 identification entry C. Entry for payment on September 14, 2018arrow_forwardAt the end of 20-3, Martel Co. had 410,000 in Accounts Receivable and a credit balance of 300 in Allowance for Doubtful Accounts. Martel has now been in business for three years and wants to base its estimate of uncollectible accounts on its own experience. Assume that Martel Co.s adjusting entry for uncollectible accounts on December 31, 20-2, was a debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts of 25,000. (a) Estimate Martels uncollectible accounts percentage based on its actual bad debt experience during the past two years. (b) Prepare the adjusting entry on December 31, 20-3, for Martel Co.s uncollectible accounts.arrow_forwardEntries for bad debt expense under the direct write-off and allowance methods The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31: A. Journalize the transactions under the direct write-off method. B. Journalize the transactions under the allowance method, assuming that the allowance account had a beginning balance of 36,000 at the beginning of the year and the company uses the analysis of receivables method. Rustic Tables Company prepared the following aging schedule for its accounts receivable: C. How much higher (lower) would Rustic Tables net income have been under the direct write-off method than under the allowance method?arrow_forward
- Entries for bad debt expense under the direct write-off and allowance methods Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: A. Journalize the write-offs under the direct write-off method. B. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded 5,250,000 of credit sales during the year. Based on past history and industry averages, % of credit sales are expected to be uncollectible. C. How much higher (lower) would Casebolt Companys net income have been under the direct write-off method than under the allowance method?arrow_forwardMillennium Associates records bad debt using the allowance, income statement method. They recorded $299,420 in accounts receivable for the year, and $773,270 in credit sales. The uncollectible percentage is 3.2%. On February 5, Millennium Associates identifies one uncollectible account from Molar Corp in the amount of $1,330. On April 15, Molar Corp unexpectedly pays its account in full. Record journal entries for the following. A. Year-end adjusting entry for 2017 bad debt B. February 5, 2018 identification entry C. Entry for payment on April 15, 2018arrow_forwardDetermining Bad Debt Expense Using the Aging Method At the beginning of the year, Tennyson Auto Parts had an accounts receivable balance of $31,800 and a balance in the allowance for doubtful accounts of $2,980 (credit). During the year, Tennyson had credit sales of $624,300, collected accounts receivable in the amount of $602,700, wrote off $18,600 of accounts receivable, and had the following data for accounts receivable at the end of the period: Required: 1. Determine the desired post adjustment balance in allowance for doubtful accounts. 2. Determine the balance in allowance for doubtful accounts before the bad debt expense adjusting entry is posted. 3. Compute bad debt expense. 4. Prepare the adjusting entry to record bad debt expense.arrow_forward
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