Carmichael Company is considering two alternative approaches to estimate uncollectible accounts expense for the current year:...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Carmichael Company is considering two alternative approaches to estimate uncollectible accounts expense for the current year: the Aging Schedule Method and the Percentage-of-Credit- Sales Approach. The Allowance for Doubtful Accounts before adjustments at December 31 showed a credit balance of $2,400. For the Aging Schedule Method the following year-end aging of the accounts receivable was prepared: Not yet due 1-30 days past due 31-60 days past due 61-90 days past due Over 90 days past due Total Amount $120,000 50,000 34,000 10,000 4,000 $218,000 Percentage Uncollectible 2% 4% 12% 24% 50% The company estimated the percentages uncollectible listed above based on past experience. For the Percentage-of-Credit-Sales the company estimates that uncollectible accounts will average 2% of net sales. Net Sales for the current year are $218,000. Instructions a. Aging Schedule Method: Compute the estimated amount of uncollectible accounts based on the above aging schedule and prepare the December 31 adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount. Also, show the year- end balance sheet presentation of Accounts Receivable and Allowance for Doubtful Accounts. b. Percentage-of-Credit-Sales Approach: Compute the estimated amount of uncollectible accounts using management's estimate that uncollectible accounts will average 2% of net sales and prepare the December 31 adjusting entry. Carmichael Company is considering two alternative approaches to estimate uncollectible accounts expense for the current year: the Aging Schedule Method and the Percentage-of-Credit- Sales Approach. The Allowance for Doubtful Accounts before adjustments at December 31 showed a credit balance of $2,400. For the Aging Schedule Method the following year-end aging of the accounts receivable was prepared: Not yet due 1-30 days past due 31-60 days past due 61-90 days past due Over 90 days past due Total Amount $120,000 50,000 34,000 10,000 4,000 $218,000 Percentage Uncollectible 2% 4% 12% 24% 50% The company estimated the percentages uncollectible listed above based on past experience. For the Percentage-of-Credit-Sales the company estimates that uncollectible accounts will average 2% of net sales. Net Sales for the current year are $218,000. Instructions a. Aging Schedule Method: Compute the estimated amount of uncollectible accounts based on the above aging schedule and prepare the December 31 adjusting entry needed to bring the Allowance for Doubtful Accounts to the proper amount. Also, show the year- end balance sheet presentation of Accounts Receivable and Allowance for Doubtful Accounts. b. Percentage-of-Credit-Sales Approach: Compute the estimated amount of uncollectible accounts using management's estimate that uncollectible accounts will average 2% of net sales and prepare the December 31 adjusting entry.
Expert Answer:
Answer rating: 100% (QA)
a Aging Schedule Method To compute the estimated amount of uncollectible accounts based on the aging ... View the full answer
Related Book For
Financial Accounting
ISBN: 978-0078025556
8th edition
Authors: Robert Libby, Patricia Libby, Daniel Short
Posted Date:
Students also viewed these accounting questions
-
Use the following selected information from Letterman Corporation to determine the Year 1 and Year 2 common size percentages for cost of goods sold using Net sales as the base. Net sales Cost of...
-
Starlight, a Broadway media firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end an aging of the accounts receivable produced the following five groupings: a....
-
Starlight, a Broadway media firm, uses the balance sheet approach to estimate uncollectible accounts expense. At year-end an aging of the accounts receivable produced the following five groupings. On...
-
Audrey has recently purchased a home with a $325,000 mortgage. She opted for monthly payments, a term of 5 years at a rate of 3.2%, and an amortization period of 25 years. Had Audrey chosen, instead,...
-
A beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school. Describe a possible negative externality and a possible positive externality...
-
A 0.22-H inductor is connected to an ac generator with an rms voltage of 12 V. For what range of frequencies will the rms current in the circuit be less than 1.0 mA?
-
Which of the following statements about the architecture of a neural network is false? a. The output layer of a neural network for a regression task commonly consists of only one neuron. b. The...
-
Kay Wing, Inc., prepared the following balance sheet at December 31, 2013. Cash ............... $ 65,000 Accounts receivable ........... 37,000 Inventory .............. 70,000 Long-term investments...
-
1. Discuss one form of radiation you encounter in your daily life and why you use it. 2. What are some of the reported effects of that type of radiation on the human body? [Sources of information...
-
State the predicted height, taken from your graph, of the ping pong ball bounce when dropped from 4 m. Then draw a sketch of the ping pong ball at the top of its bounce (maximum height) and give your...
-
Derivative of an equation is basically getting the the slope at a certain point but we know that you can get the slope using the formula using a Ay m= we can re-write if by S'(x) = f(x+h)-f(x-h) 2h...
-
ABC Bank is a commercial bank in Comry X. Aswee the required reserve ratio of 25% nod banis in Couttry X keep If Maria deposits $1,000 in cash at ABC Bank, what will happen to the money supply after...
-
What were the working conditions for workers (children) in the late 1700s to early 1900s. Descriptions of the working conditions in the late 1700s to early 1900s that led to reforms in work practices...
-
If these two countries trade these two goods with each other, what would the Ricardian model of comparative advantage suggest would be the upper limit for the world equilibrium price of bread in...
-
In an extrinsic semiconductor, can you calculate the size of the intrinsic bandgap using temperature dependent electrical transport measurements? Explain why
-
Evaluate et dx as an infinite series.
-
Four wires are made of the same highly resistive material, cut to the same length, and connected in series. Wire 1 has resistance R1 and cross-sectional area A. Wire 2 has resistance R2 and...
-
Feller Company purchased a site for a limestone quarry for $100,000 on January 2, 2019. It estimate that the quarry will yield 400,000 tons of limestone. It estimates that its retirement obligation...
-
Aubrae Company is making adjusting entries for the year ended December 31, 2014. In developing information for the adjusting entries, the accountant learned the following: a. A two-year insurance...
-
Dell Inc. is the leading manufacturer of personal computers. In a recent year, it reported the following in dollars in millions: Net sales revenue .... $62,071 Cost of sales ...... 48,260 Beginning...
-
Refer to P2-5. Required: For each of the activities (a)(g), indicate whether the activity is investing (I) or financing (F) and the direction and amount of the effect on cash flows (+ for increases;...
-
Two small pith balls, initially separated by a large distance, are each given a positive charge of \(5.0 \mathrm{nC}\). By how much does the electric potential energy of the two-ball system change if...
-
The negative terminal of a \(9-\mathrm{V}\) battery is connected to ground via a wire. (a) What is the potential of the negative terminal? (b) What is the potential of the positive terminal? (c) What...
-
Two metallic spheres A and B are placed on nonconducting stands. Sphere A carries a positive charge, and sphere B is electrically neutral. The two spheres are connected to each other via a wire, and...
Study smarter with the SolutionInn App