Allowance method: It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account. Two methods to estimate uncollectible accounts under allowance method are: 1. Percentage of sales method, and 2. Analysis of receivables method. Percentage of sales method: Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales. It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period. Analysis of receivables method: A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as analysis of receivables method. This method is otherwise known as aging of receivables method. Under analysis of receivables method, estimated bad debts would be treated as the desired adjusted balance for allowance for doubtful accounts. Allowance for doubtful account is a contra asset account, whose normal balance is a credit balance. The amount of the adjusting entry to provide for doubtful accounts under each assumption.

Question

Want to see the full answer?

Answer 1

Question

Chapter 8, Problem 8.6EX

(a)

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

Analysis of receivables method:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as analysis of receivables method. This method is otherwise known as aging of receivables method. Under analysis of receivables method, estimated bad debts would be treated as the desired adjusted balance for allowance for doubtful accounts.

Allowance for doubtful account is a contra asset account, whose normal balance is a credit balance.

The amount of the adjusting entry to provide for doubtful accounts under each assumption.

(b)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $125,000.

(c)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if bad debts are estimated at 1/2 of 1% of sales.

(d)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $180,000.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Butler Tech, Inc., is expanding into India. The company must decide where to locate and how to finance the expansion. Requirement Identify the financial statement where these decision makers can find the following information about Butler Tech, Inc. In some cases, more than one statement will report the needed data. Question content area bottom Part 1 Part 2 a. Revenue Income statement b. Common stock Balance sheet c. Current liabilities Balance sheet d. Long-term debt Balance sheet e. Dividends Statement of retained earnings and Statement of cash flows f. Ending cash balance Balance sheet and Statement of cash flows g. Adjustments to reconcile net income to net cash provided by operations Statement of cash flows h. Cash spent to acquire the building i. Income tax expense j. Ending balance of retained earnings k. Selling,…

What is the depreciation expense in 2015 ??

Please given correct answer general accounting

Answer 2

Question

Chapter 8, Problem 8.6EX

(a)

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

Analysis of receivables method:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as analysis of receivables method. This method is otherwise known as aging of receivables method. Under analysis of receivables method, estimated bad debts would be treated as the desired adjusted balance for allowance for doubtful accounts.

Allowance for doubtful account is a contra asset account, whose normal balance is a credit balance.

The amount of the adjusting entry to provide for doubtful accounts under each assumption.

(b)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $125,000.

(c)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if bad debts are estimated at 1/2 of 1% of sales.

(d)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $180,000.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

Question

Chapter 8, Problem 8.6EX

(a)

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

Analysis of receivables method:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as analysis of receivables method. This method is otherwise known as aging of receivables method. Under analysis of receivables method, estimated bad debts would be treated as the desired adjusted balance for allowance for doubtful accounts.

Allowance for doubtful account is a contra asset account, whose normal balance is a credit balance.

The amount of the adjusting entry to provide for doubtful accounts under each assumption.

(b)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $125,000.

(c)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if bad debts are estimated at 1/2 of 1% of sales.

(d)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $180,000.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 8, Problem 8.6EX

(a)

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

Analysis of receivables method:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as analysis of receivables method. This method is otherwise known as aging of receivables method. Under analysis of receivables method, estimated bad debts would be treated as the desired adjusted balance for allowance for doubtful accounts.

Allowance for doubtful account is a contra asset account, whose normal balance is a credit balance.

The amount of the adjusting entry to provide for doubtful accounts under each assumption.

(b)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $125,000.

(c)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if bad debts are estimated at 1/2 of 1% of sales.

(d)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $180,000.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

Chapter 8, Problem 8.6EX

(a)

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

Analysis of receivables method:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as analysis of receivables method. This method is otherwise known as aging of receivables method. Under analysis of receivables method, estimated bad debts would be treated as the desired adjusted balance for allowance for doubtful accounts.

Allowance for doubtful account is a contra asset account, whose normal balance is a credit balance.

The amount of the adjusting entry to provide for doubtful accounts under each assumption.

(b)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $125,000.

(c)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if bad debts are estimated at 1/2 of 1% of sales.

(d)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $180,000.

Answer 6

Chapter 8, Problem 8.6EX

(a)

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

Analysis of receivables method:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as analysis of receivables method. This method is otherwise known as aging of receivables method. Under analysis of receivables method, estimated bad debts would be treated as the desired adjusted balance for allowance for doubtful accounts.

Allowance for doubtful account is a contra asset account, whose normal balance is a credit balance.

The amount of the adjusting entry to provide for doubtful accounts under each assumption.

Answer 7

Chapter 8, Problem 8.6EX

(a)

To determine

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Two methods to estimate uncollectible accounts under allowance method are:

1. Percentage of sales method, and

2. Analysis of receivables method.

Percentage of sales method:

Credit sales are recorded by debiting (increasing) accounts receivable account. The bad debts is a loss incurred out of credit sales, hence uncollectible accounts can be estimated as a percentage of credit sales or total sales.

It is a method of estimating the bad debts (expected loss on extending credit), by multiplying the expected percentage of uncollectible with the total amount of net credit sale (or total sales) for a specific period. Under percentage of sales method, estimated bad debts would be treated as a bad debt expense of the particular period.

Analysis of receivables method:

A method of determining the estimated uncollectible receivables based on the age of individual accounts receivable is known as analysis of receivables method. This method is otherwise known as aging of receivables method. Under analysis of receivables method, estimated bad debts would be treated as the desired adjusted balance for allowance for doubtful accounts.

Allowance for doubtful account is a contra asset account, whose normal balance is a credit balance.

The amount of the adjusting entry to provide for doubtful accounts under each assumption.

Answer 8

(b)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $125,000.

Answer 9

(b)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $125,000.

Answer 10

(c)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if bad debts are estimated at 1/2 of 1% of sales.

Answer 11

(c)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if bad debts are estimated at 1/2 of 1% of sales.

Answer 12

(d)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $180,000.

Answer 13

(d)

To determine

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $180,000.

Answer 14

Expert Solution & Answer

Answer 15

Expert Solution & Answer

Answer 16

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 17

Ch. 8 - What are the three classifications of receivables?Ch. 8 - Dans Hardware is a small hardware store in the...Ch. 8 - What kind of an account (asset, liability, etc.)...Ch. 8 - After the accounts are adjusted and closed at the...Ch. 8 - A firm has consistently adjusted its allowance...Ch. 8 - Which of the two methods of estimating...Ch. 8 - Neptune Company issued a note receivable to...Ch. 8 - Prob. 8DQ Ch. 8 - The maker of a 240,000, 6%, 90-day note receivable...Ch. 8 - The note receivable dishonored in Discussion...

Solution Summary: The author explains the allowance method and the analysis of receivables method.

Concept explainers

Videos

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $125,000.

Determine the amount of the adjusting entry for doubtful accounts, if bad debts are estimated at 1/2 of 1% of sales.

Determine the amount of the adjusting entry for doubtful accounts, if estimated doubtful accounts under aging of receivables method is $180,000.

Want to see the full answer?

Chapter 8 Solutions