The unadjusted trial balance of Paris Company as of December 31, 2020 showed Account Receivable- trade...

 

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The unadjusted trial balance of Paris Company as of December 31, 2020 showed Account Receivable- trade with a balance of 688,500. Investigation revealed that it included amounts due from officers-P71,000; claim pending against freight company-P8,000; and refund on insurance policy-P4,300. The trial balance also showed total net sales of 1,000,000 during the year. It is the company policy to provide allowance of 3% based on net sales. An aging schedule of account receivable as of December 31, 2020 is presented below: Age 60 days and under 61-90 days 91-120 days Over 120 days Total Net debit balance 259,618 202,437 51,686 31,331 January 1 November 30,2020 December 30,2020 Percentage to be applied after corrections have been made 1% 3% 5% 545,072 The only entries made in the Bad Debt expense account were: a. A debit on December 30 for the amount of the credit to the Allowance for Bad debts. Definitely....uncollectible, 7,000; the remainder is estimated to be 75% collectible. b. A credit of 4,190 on November 30,2020 and a debit to Allowance for bad debts because of bankruptcy. The related sale took place on October 1, 2020. The Allowance for Bad Debts schedule is presented below. Credit Debit Balance 13,553 9,363 30,000 4,190 20,637 There is a credit balance in one account receivable (61-90 days) of 7,500; it represents an advance on a sale contract. 1. How much is the net realizable value of account receivable? 2. How much is the net adjustment to the bad debt expense account? Indicate if debit or credit. 3. How much is the total bad debt expense for the year 2020? The unadjusted trial balance of Paris Company as of December 31, 2020 showed Account Receivable- trade with a balance of 688,500. Investigation revealed that it included amounts due from officers-P71,000; claim pending against freight company-P8,000; and refund on insurance policy-P4,300. The trial balance also showed total net sales of 1,000,000 during the year. It is the company policy to provide allowance of 3% based on net sales. An aging schedule of account receivable as of December 31, 2020 is presented below: Age 60 days and under 61-90 days 91-120 days Over 120 days Total Net debit balance 259,618 202,437 51,686 31,331 January 1 November 30,2020 December 30,2020 Percentage to be applied after corrections have been made 1% 3% 5% 545,072 The only entries made in the Bad Debt expense account were: a. A debit on December 30 for the amount of the credit to the Allowance for Bad debts. Definitely....uncollectible, 7,000; the remainder is estimated to be 75% collectible. b. A credit of 4,190 on November 30,2020 and a debit to Allowance for bad debts because of bankruptcy. The related sale took place on October 1, 2020. The Allowance for Bad Debts schedule is presented below. Credit Debit Balance 13,553 9,363 30,000 4,190 20,637 There is a credit balance in one account receivable (61-90 days) of 7,500; it represents an advance on a sale contract. 1. How much is the net realizable value of account receivable? 2. How much is the net adjustment to the bad debt expense account? Indicate if debit or credit. 3. How much is the total bad debt expense for the year 2020?

Answer rating: 100% (QA)

1Net realizable value 1 uncollectible x account receivable Net rea... View the full answer