Intermediate Accounting (2nd Edition)
2nd Edition
ISBN: 9780134730370
Author: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Publisher: PEARSON
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Chapter 9, Problem 9.5P
Cho Sportswear: Aged Schedule of Accounts Receivable
| Past Due | ||||||
| Customer | Current | 1-30 Days | 31-60 Days | 61-90 Days | Over 90 Days | Totals |
| Ryoko Design Assosciates | $100,000 | $23,800 | $ 123,800 | |||
| Marcy Fashions, Inc | 657,000 | 198,000 | $76,000 | 931,000 | ||
| Conory Clothing | $456,000 | $789,412 | 1,245,412 | |||
| Lee Womensware | 237,200 | 10,230 | 54,570 | 349,200 | 651,200 | |
| Bauer Brands, Ltd. | 100,230 | 76,770 | 41,588 | 19,000 | 237,588 | |
| Totals | $1,094,430 | $308,800 | $130,570 | $846,788 | $808,412 | $3,189,000 |
The company estimated an allowance for uncollectible accounts based on the following estimates
| Aging Category | Allowance Provided |
| Current | 5% |
| 1 -30 days past due | 9 |
| 31-60 days past due | 20 |
| 61-90 days past due | 55* |
| Over 90 days past due | 80* |
After a specific review of the company’s accounts receivable, Cho’s credit manager decided to provide a full allowance against all Bauer Brands’ balances that are more than 60 days past due. The percentage allowance is applied to the 61-90 days and over 90 days past due aging categories only after deducting the balances due from Bauer Brands.
Cho reported net credit sales of $45,000,000 for the current year. We present the company’s of accounts receivable and the allowance for uncollectible accounts:
Required
- a. Compute the balance required in the allowance for uncollectible accounts at the end of the year.
- b. Prepare the journal entry to record the bad debt provision for the current year.
- c. Independent of your answer to part (b) prepare the journal entry to record the bad debt provision for the current year assuming that the allowance for uncollectible accounts had a $331,000 debit balance.
- d. In the following year, Cho’s credit management decided to write off all accounts that were over 90 days past due. Prepare the journal entry.
- e. After the write-offs recorded in part (d), assume that Conroy Clothing pays the entire balance due. Prepare the journal entries required to record the subsequent recovery of the Conroy Clothing receivables.
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Customer
Bad Debt Expense, Aging of Accounts Receivable, Journal Entry.
Giaraldi Garden Products, Inc. developed an aged schedule of accounts receivable at the end of each year.
Giaraldi Garden Products: Aged Schedule of Accounts Receivable
Past Due
Current 1-30 Days 31-60 Days 61-90 Days Over 90 Days
The company estimated an allowance for uncollectible accounts based on the following estimates:
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Current
Allowance Provided
3%
1-30 days past due
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31-60 days past due
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61-90 days past due
45%
Carey Company
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10,000 $
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Over 90 days past due
100%
Gibson, Ltd.
$
423,000 $
27,000
450,000
KW Quarterly
Onix Construction
33,000 $ 67,000
100,000
1,500
101,500
Giaraldi reported for the current year:
45,000
Carpenter Lumber
Totals
387,000
$
125,000
810,000 $ 185,000 $ 167,000 $
90,500
500
235,500
512,500
Net credit sales
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The company's ending balances of accounts receivable and the allowance for uncollectible accounts…
Renta
Public Image, a firm specializing in marketing and publicity services, uses the balance sheet ap-
proach to estimate uncollectible accounts expensc. At year-end an aging of the accounts receiv- Aging Accounts
able produced the following classification:
PROBLEM 7.5
Receivable; Write-offs
LO 5
Not yet due
1-30 days past due
$333,000
135,000
31-60 days past due
58,500
61-90 days past due
13,500
Over 90 days past due
22,500
Total
$562,500
On the basis of past experience, the company estimated the percentages probably uncollectible
for the above five age groups to be as follows: Group I, 1%; Group 2, 3%; Group 3, 10%; Group 4,
20%; and Group 5, 50%.
The Allowance for Doubtful Accounts before adjustment at December 31 showed a credit bal-
ance of $8,100.
Instructions
& Compute the estimated amount of uncollectible accounts based on the above classification by
age groups.
6. Prepare the adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper
amount.
C. Assume…
c. Of the above accounts, Y5,000 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account
Chapter 9 Solutions
Intermediate Accounting (2nd Edition)
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