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You are an accountant at Company XYZ, which has a fiscal year ending on December 31. It is now December 31, 2022, and you are getting ready to record the adjusting journal entry for this year's bad debt expense. The credit department has prepared for you a list of your accounts receivables with their respective ages. Accounts Receivable as of 12/31 Amounts Age A B D E F $120,000 Not yet due $45,000 Not yet due $32,000 15 days past due $68,000 34 days past due $9,100 65 days past due $77,000 370 days past due The credit department estimates the following percentage of uncollectible accounts receivable by age: Status Not yet due 1- 30 days past due 31-90 days past due > 90 days past due Estimated % Uncollectible A/R 1% 7.50% 20% 80% You then inspect the accounting records for the year and note that during the year, the company had write-offs of $60,400 and recoveries of $250. The beginning of the year's Allowance for Doubtful Accounts (AFDA) had a credit balance of $54,900. You also note that total credit sales during the year were $6,810,000. The credit department informs you that historically, 1.25% of credit sales have proven to be uncollectible. a) Using the aging method of estimating uncollectible accounts, what is the ending balance for the Allowance for Doubtful Accounts and the resulting Bad Debt Expense for the year? Use the following numeric format 12345 (no dollar signs or commas). Round to the nearest dollar. Allowance for Doubtful Accounts - Ending Balance (12/31) Bad Debt Expense b) Suppose that XYZ company uses the percent of sales method to estimate uncollectible accounts. What is the bad debt expense for the year and the resulting Allowance for Doubtful Accounts - ending balance? Use the following numeric format 12345 (no dollar signs or commas). Round to the nearest dollar. Bad Debt Expense Allowance for Doubtful Accounts - Ending balance (12/31) You are an accountant at Company XYZ, which has a fiscal year ending on December 31. It is now December 31, 2022, and you are getting ready to record the adjusting journal entry for this year's bad debt expense. The credit department has prepared for you a list of your accounts receivables with their respective ages. Accounts Receivable as of 12/31 Amounts Age A B D E F $120,000 Not yet due $45,000 Not yet due $32,000 15 days past due $68,000 34 days past due $9,100 65 days past due $77,000 370 days past due The credit department estimates the following percentage of uncollectible accounts receivable by age: Status Not yet due 1- 30 days past due 31-90 days past due > 90 days past due Estimated % Uncollectible A/R 1% 7.50% 20% 80% You then inspect the accounting records for the year and note that during the year, the company had write-offs of $60,400 and recoveries of $250. The beginning of the year's Allowance for Doubtful Accounts (AFDA) had a credit balance of $54,900. You also note that total credit sales during the year were $6,810,000. The credit department informs you that historically, 1.25% of credit sales have proven to be uncollectible. a) Using the aging method of estimating uncollectible accounts, what is the ending balance for the Allowance for Doubtful Accounts and the resulting Bad Debt Expense for the year? Use the following numeric format 12345 (no dollar signs or commas). Round to the nearest dollar. Allowance for Doubtful Accounts - Ending Balance (12/31) Bad Debt Expense b) Suppose that XYZ company uses the percent of sales method to estimate uncollectible accounts. What is the bad debt expense for the year and the resulting Allowance for Doubtful Accounts - ending balance? Use the following numeric format 12345 (no dollar signs or commas). Round to the nearest dollar. Bad Debt Expense Allowance for Doubtful Accounts - Ending balance (12/31)
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a Using the aging method of estimating uncollectible accounts Step 1 Calculate the estimated uncolle... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
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