Question 3 Provincial Limited had a beginning balance of $3,200 credit balance in Allowance for Doubtful accounts
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Question 3 | |||
Provincial Limited had a beginning balance of $3,200 credit balance in Allowance for Doubtful accounts at December 31, 2024. An aging of the accounts receivable revealed the following: | |||
Accounts Receivable | Estimated Percentage | Estimated uncollectible amount | |
Uncollectible | |||
Current | $600,000 | 1% | |
1-30 days past due | 60,000 | 3% | |
31-60 days past due | 32,000 | 6% | |
61-90 days past due | 20,000 | 12% | |
Over 90 days past due | 24,000 | 30% | |
Total accounts receivable | $736,000 | ||
Required: | |||
a) Calculate the total estimated uncollectible amount by completing the aging schedule above (2 marks). | |||
b) Prepare the adjusting entry at December 31, 2024, to recognize allowance for doubtful debts (1 mark). | |||
c) Assume the same facts except that the Allowance for Doubtful account had an opening debit balance of $3,200. Prepare the adjusting entry for the current year's allowance for doubtful debt (1 mark). | |||
Question 4 | |||
The following information is available from the financial statements of Amamco Corp. and Brindle Corp.: | |||
(in millions) | |||
Amamco Corp. | Brindle Corp. | ||
Credit Sales | $45,000 | $25,000 | |
Beginning receivables, gross | 22,000 | 3,500 | |
Ending receivables, gross | 17,500 | 4,000 | |
a) Calculate the following for each company: | |||
Amamco Corp. (2 marks) | Brindle Corp. (2 marks) | ||
Receivables Turnover | |||
(keep to 1 decimal place) | |||
Average Collection Period | |||
(round to up the nearest whole number) | |||
b) Which company appears to have a better management of accounts receivable? Why? | |||
Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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