Norse began the year with the following balances in its accounts receivable and allowance for doubtful...
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Norse began the year with the following balances in its accounts receivable and allowance for doubtful accounts: Accounts Receivable Balance, 1/1/x6: $1,275,500 Allowance for Doubtful Accounts, 1/1/x6: $42,100 For Q1-Q3. Norse Enterprises uses the income statement method, applying a 0.5% estimate to net credit sales. At the end of Q4. Norse utilizes the balance sheet method with a comprehensive aging schedule of accounts to prepare its audited annual reports. Table 1: Summarized receivable transactions by quarter for 20x6 Cash Collected from Accounts Gross Credit Sales QI 2,020,000 Q2 2,945,750 Q3 2,701.500 Q4 2,616,000 2,820,000 2,917,000 2,646,000 2,589,000 Days Outstanding 1-30 days 31-60 days 61-90 days 91-120+ days Total Sales Discounts Recorded 45,000 63,000 51,000 53,000 $102,300 81,000 Write-Offs 25,000 10,700 Table 2: Aging schedule used for determining bad debt expense at the end of the year Value of Accounts Probability of Default 3.5% 4.5% 47,700 33,550 $264,550 40,000 35,000 Account Reinstatements. 0 2,000 5,000 0 7.8% 12% Account Recoveries 0 1,000 4,000 1,500 Record the journal entries indicated by the transactions indicated in Table 1 (record effects to A/L/NI with each entry). a. b. Provide the bad debt expense adjustments for each quarter (record effects to A/L/NI with each entry). Use the income statement method for each interim quarter. The quarter four adjustment will be done by the balance sheet method using the aging schedule provided above. c. Provide the NRV of receivables at the end of each quarter that would be reported on the balance sheet. Hint: Keep a constant t-account for Accounts Receivable and ADA along with journal entries for the t- accounts. Parts A & B should be worked in tandem. A is simply the normal entries during the period, B is the adjusting entry at the end of each quarter (bad debt adjustments are made at the end of each quarter). Here are check figures for the end of each quarter: Norse began the year with the following balances in its accounts receivable and allowance for doubtful accounts: Accounts Receivable Balance, 1/1/x6: $1,275,500 Allowance for Doubtful Accounts, 1/1/x6: $42,100 For Q1-Q3. Norse Enterprises uses the income statement method, applying a 0.5% estimate to net credit sales. At the end of Q4. Norse utilizes the balance sheet method with a comprehensive aging schedule of accounts to prepare its audited annual reports. Table 1: Summarized receivable transactions by quarter for 20x6 Cash Collected from Accounts Gross Credit Sales QI 2,020,000 Q2 2,945,750 Q3 2,701.500 Q4 2,616,000 2,820,000 2,917,000 2,646,000 2,589,000 Days Outstanding 1-30 days 31-60 days 61-90 days 91-120+ days Total Sales Discounts Recorded 45,000 63,000 51,000 53,000 $102,300 81,000 Write-Offs 25,000 10,700 Table 2: Aging schedule used for determining bad debt expense at the end of the year Value of Accounts Probability of Default 3.5% 4.5% 47,700 33,550 $264,550 40,000 35,000 Account Reinstatements. 0 2,000 5,000 0 7.8% 12% Account Recoveries 0 1,000 4,000 1,500 Record the journal entries indicated by the transactions indicated in Table 1 (record effects to A/L/NI with each entry). a. b. Provide the bad debt expense adjustments for each quarter (record effects to A/L/NI with each entry). Use the income statement method for each interim quarter. The quarter four adjustment will be done by the balance sheet method using the aging schedule provided above. c. Provide the NRV of receivables at the end of each quarter that would be reported on the balance sheet. Hint: Keep a constant t-account for Accounts Receivable and ADA along with journal entries for the t- accounts. Parts A & B should be worked in tandem. A is simply the normal entries during the period, B is the adjusting entry at the end of each quarter (bad debt adjustments are made at the end of each quarter). Here are check figures for the end of each quarter:
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Answer rating: 100% (QA)
SOLUTION a Recording the journal entries indicated by the transactions in Table 1 Quarter 1 1 Accoun... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Posted Date:
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