Paisley Corporation operates in an industry that has a high rate of bad debt. The year-end balance
Fantastic news! We've Found the answer you've been seeking!
Question:
Paisley Corporation operates in an industry that has a high rate of bad debt. The year-end balance reported in the balance sheet for the Allowance for Doubtful Accounts will be based on the aging schedule shown below:
Expected Percentage | |||
Days Account | Uncollectible | Estimated Uncollectible | |
Outstanding | Amount | ||
0–30 days | $351,600 | 0.05 | $17,580 |
31–60 days | $122,400 | 0.1 | $12,240 |
61–90 days | $84,000 | 0.2 | $16,800 |
91–120 days | $66,000 | 0.3 | $19,800 |
Over 120 days | $9,600 | 0.4 | $3,840 |
633,600 | $70,260 | ||
Accounts receivable ............................................................................................. | $633,600 | ||
Less: Allowance for doubtful accounts .................................................................. | 70,260 | ||
Accounts receivable (net) ..................................................................................... | $563,340 | ||
Estimated amount required in the Allowance | |||
for Doubtful Accounts (credit balance) ............................................................... | $70,260 | ||
Balance in the account after write-off of uncollectible | |||
accounts but before adjustment (debit balance) ................................................ | $8,000 | ||
Required charge to expense (need to add due to debit balance) ................... | $78,260 |
Before year-end adjustments, Paisley’s Allowance for Doubtful Accounts had a debit balance of $8,000.
What is the appropriate balance for the Allowance for Doubtful Accounts at year-end?
Show how accounts receivable would be presented on the balance sheet. State the differences between U.S. GAAP and IFRS reporting for accounts receivable.
What is the year-end bad debt adjustment?
Related Book For
Intermediate Accounting
ISBN: 9781119790976
18th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date: