Question

The unadjusted net accounts receivable on the books of Elantra Limited as of 31 December 20X4 are as follows:
Accounts receivable.............. $ 100,000
Less: Allowance for doubtful accounts........ 10,000
...................... $ 90,000
Two alternatives are being considered for estimating the allowance at the end of 20X4: Alternative 1: Percentage of credit sales; Sales revenue was $ 3,000,000, of which 40% was on credit and 1% might be uncollectible
Alternative 2: Aging; 40% of the accounts are current and 5% might not be collected, and the remainder is past due and 30% might not be collected.

Required:
For each alternative, calculate the bad debt expense, the balance in the allowance for doubtful accounts, and the net accounts receivable on the SFP at the end of 20X4.



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  • CreatedFebruary 17, 2015
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