Please provide calculations:
15. ABC company uses the estimate of sales method of accounting for uncollectible accounts. ABC estimates that 3% of all credit sales will be uncollectible. On January 1, 2005, the Allowance for Doubtful Accounts had a credit balance of $2,400. During 2005, ABC wrote-off accounts receivable totaling $1,800 and made credit sales of $100,000. After the adjusting entry, the December 31, 2005, balance in the Uncollectible Accounts Expense would be ________. (Points: 4)
16. Allowance for Doubtful Accounts has a credit balance of $1,500 at the end of the year (before adjustment), and an analysis of customers' accounts indicates doubtful accounts of $17,900. Which of the following entries records the proper provision for doubtful accounts? (Points: 4)
debit Allowance for Doubtful Accounts, $16,400; credit Uncollectible Accounts Expense, $16,400
debit Allowance for Doubtful Accounts, $19,400; credit Uncollectible Accounts Expense, $19,400
debit Uncollectible Accounts Expense, $19,400; credit Allowance for Doubtful Accounts, $19,400
debit Uncollectible Accounts Expense, $16,400; credit Allowance for Doubtful Accounts, $16,400
15. The problem tells us that the allowance at year end should equal 3% of credit sales. 100,000 x 3% = $3000. As a contra account to accounts receivable, the normal balance will be a credit.
Balance at 1-1-05 $(2,400)
2005 write-offs 1,800
Adjusting entry (3,000)
Balance at 12-31-05 (3,600)
The point to understand is ...
The solution provides the calculations for the two problems but also explains the difference in the two methods of computing an allowance amount. Both methods are acceptable, but quite different in their approach.
Calculate allowance for doubtful accounts; prepare journal entry
Please find attached the XCEL file containing the questions.
Grayson Group showed the following unadjusted account balances,
each with a normal balance, at December 31, 2007:
Accounts Receivable $374,000
Allowance for Doubtful Accounts $2,200
Sales (all on credit) $1,125,000
Sales Discounts $17,000
Grayson Group uses an aging analysis to estimate uncollectible
receivables as shown below:
31-Dec-07 Ages of Accounts Estimated
Accounts Receivable Percentage
$290,000 Not due(under 30 days) 1.00%
$61,000 1 to 30 days past due 4.00%
$19,000 31 to 60 days past due 10.00%
$4,000 over 60 days past due 60.00%
a. Calculate the amount that should appear in the December 31, 2007 balance
sheet as the allowance for doubtful accounts:____________________________.
b. Calculate the amount that should appear in the income statement for the year
ended December 31, 2007, as a bad debt expense:_______________________.
c. Prepare the December 31, 2007 adjusting entry to record the estimated bad debt
expense for the year just ended.
Date Account Titles and Explanation Debit Credit
d. What is the purpose of the adjusting entry in (c) above?View Full Posting Details