Manilow Company has asked you to help create year-end journal entries. They are currently reporting $555,000.00 in
Question:
Manilow Company has asked you to help create year-end journal entries. They are currently reporting $555,000.00 in accounts receivable and they have sent you a download of their accounts receivable subsidiary ledger for your review, along with the A/R general ledger and the GL print-out of the Allowance Account.
Instructions
Calculate the following items:
- Using the attached spreadsheet, complete the:
- Net Realizable Value of Accounts Receivable using the aging analysis.
- Allowance for doubtful accounts amount.
- Bad debt expense.
- Manilow Company also wants to know how close they would be to the same result if they used the % of sales method monthly.
- Use Total credit sales for the year = $4,800,000 and estimated bad debt expense = 0.5% of sales.
- Calculate the % of sales you would tell Manilow Company to use to come close to the Allowance for doubtful accounts total from 1(a).
Part 1(a): Net Realizable Value
Manilow Corporation
Accounts Receivable Aging Analysis as of 30-Sep-20
current | |||||||
invoice date | 0–30 days | 31–60 days | 61–90 days | 91–120 days | >120 days | ||
ABC Company | 9/1/2020 | $ 25,000.00 | $ 25,000.00 | $ - | $ - | $ - | $ - |
9/30/2020 | $ 99,500.00 | $ 99,500.00 | $ - | $ - | $ - | $ - | |
Babab, Inc. | |||||||
3/3/2019 | $ 15,000.00 | $ - | $ - | $ - | $ - | $ 15,000.00 | |
7/31/2020 | $ 35,000.00 | $ - | $ - | $ 35,000.00 | $ - | $ - | |
Country, LLC | |||||||
9/5/2020 | $ 15,000.00 | $ 15,000.00 | $ - | $ - | $ - | $ - | |
6/15/2020 | $ 10,000.00 | $ - | $ - | $ - | $ 10,000.00 | $ - | |
Debo, Co. | |||||||
8/15/2020 | $ 15,000.00 | $ - | $ 15,000.00 | $ - | $ - | $ - | |
4/20/2020 | $ 20,000.00 | $ - | $ - | $ - | $ - | $ 20,000 | |
LaLa Land | |||||||
9/9/2020 | $ 5,000.00 | $ 5,000 | $ - | $ - | $ - | $ - | |
9/30/2020 | $ 125,000.00 | $ 125,000.00 | $ - | $ - | $ - | $ - | |
Monte and Sons | |||||||
9/11/2020 | $ 2,800.00 | $ 2,800.00 | $ - | $ - | $ - | $ - | |
8/4/2020 | $ 25,000.00 | $ - | $ 25,000.00 | $ - | $ - | $ - | |
Operational Orgs | |||||||
9/13/2020 | $ 42,200.00 | $ 42,200.00 | $ - | $ - | $ - | $ - | |
8/31/2020 | $ 45,000.00 | $ 45,000.00 | $ - | $ | $ - | $ - | |
Ready Mix | |||||||
9/15/2020 | $ 35,000.00 | $ 35,000.00 | $ - | $ - | $ - | $ - | |
9/16/2020 | $ 40,500.00 | $ 40,500.00 | $ - | $ - | $ - | $ - | |
Probability of collection | |||||||
95% | 90% | 80% | 70% | 40% |
Expert Answer:
Net Realizable Value of Accounts Receivable The net realizable value of accounts receivable is the amount of money that a company expects to collect o... View the full answer
