Question: Assume you were recently hired by Caffe D Amore the company

Assume you were recently hired by Caffe D’Amore, the company that formulated the world’s first flavored instant cappuccino and now manufactures several lines of flavored cappuccino mixes. Given the company’s tremendous sales growth, Caffe D’Amore’s receivables also have grown. Your job is to evaluate and improve collections of the company’s receivables.
By analyzing collections of accounts receivable over the past five years, you were able to estimate bad debt loss rates for balances of varying ages. To estimate this year’s uncollectible accounts, you jotted down the historical loss rates on the last page of a recent aged listing of out-standing customer balances (see below).
1. Enter the above totals in a spreadsheet and then insert formulas to calculate the total estimated uncollectible balance.
2. Prepare the year-end adjusting journal entry to adjust the Allowance for Doubtful Accounts to the balance you calculated above. Assume the allowance account has an unadjusted credit balance of $ 8,000.
3. Of the customer account balances shown above on the last page of the aged listing, which should be your highest priority for contacting and pursuing collection?
4. Assume Jumpy Jim’s Coffee account is determined to be uncollectible. Prepare the journal entry to write off the entire account balance.

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  • CreatedNovember 02, 2015
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