on this sale were $20,200 in 2020, $14,100 in 2021, and $21,200 in 2022. In 2022, Reliable would recognize gross profit of: Multiple Choice $4,500.
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Reliable Enterprises sells distressed merchandise on extended credit terms. Collections on these sales are not reasonably assured, and
In 2022, Reliable would recognize gross profit of:
-
$4,500.
-
$10,500.
-
$0.
-
$21,200.
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- Reliable Enterprises sells distressed merchandise on extended credit terms. Collections on these sales are not reasonably assured, and bad debt losses cannot be reasonably predicted. It is unlikely that repossessed merchandise is in condition to be re-sold. Therefore, Reliable uses the cost recovery method. Merchandise costing $32,250 was sold for $56,500 in 2020. Collections on this sale were $20,600 in 2020, $14,700 in 2021, and $21,200 in 2022. In 2022, Reliable would recognize gross profit of:Reliable Enterprises sells distressed merchandise on extended credit terms. Collections on these sales are not reasonably assured, and bad debt losses cannot be reasonably predicted. It is unlikely that repossessed merchandise is in condition to be re-sold. Therefore, Reliable uses the cost recovery method. Merchandise costing $30,750 was sold for $58,500 in 2017. Collections on this sale were $21,800 in 2017, $15,600 in 2018, and $21,100 in 2019. In its 2018 year-end balance sheet, Reliable would report installment receivables (net) of: Multiple Choice $21,100. $0. $4,000. $15,600.Einhorn Industries believes it is not probable that Thaler Inc. will default on an account receivable, but given thepossibility of default, Einhorn believes it will collect $30,000 less than the receivable’s current carrying value onEinhorn’s balance sheet. Under current GAAP, how much impairment charge should Einhorn recognize?
- Radiant Company sells a variety of imported goods. By selling on credit, Radiant cannot expect to collect 100% of its accounts receivable. At December 31, 2019, Radiant reported the following in its statement of financial position: Accounts receivable P2,197,500 Less allowance for bad debts ( 133,500) Accounts receivable, net P2,064,000 During the year ended December 31, 2020, Radiant earned sales revenue of P537,702,500 and collected cash of P528,070,500 from customers. Assume bad debts expense for the year was 1% of sales revenue and that Radiant wrote off uncollectible accounts receivable totaling P5,439,500. Required:Compute for the following a.Accounts receivable balance at December 31, 2020 b.December 31, 2020 balance of the Allowance for Bad Debts accountErvin Company uses the allowance method to account for uncollectible accounts receivable. The allowance account is adjusted based on bad debt expense as a percentage of credit sales. For 2024, net credit sales totaled $5,100,000, and the estimated bad debt percentage is 1,20%. No previously written-off accounts receivable were reinstated during 2024. The allowance for uncollectible accounts had a credit balance of $48,000 at the beginning of 2024 and $43,000, after adjusting entries, at the end of 2024. Required: 1. What is bad debt expense for 2024 as a percent of net credit sales? 2. Assume Ervin makes no other adjustment of bad debt expense during 2024. Determine the amount of accounts receivable written off during 2024. 3. If the company uses the direct write-off method, what would bad debt expense be for 2024? 1. Bad debt expense as a percent of net credit sales 2. Accounts receivable written off 3. Bad debt expense using the direct write-aft methodErvin Company uses the allowance method to account for uncollectible accounts receivable. The allowance account is adjusted based on bad debt expense as a percentage of credit sales. For 2024, net credit sales totaled $5,900,000, and the estimated bad debt percentage is 1.50%. No previously written-off accounts receivable were reinstated during 2024. The allowance for uncollectible accounts had a credit balance of $56,000 at the beginning of 2024 and $47,000, after adjusting entries, at the end of 2024. Required: 1. What is bad debt expense for 2024 as a percent of net credit sales? 2. Assume Ervin makes no other adjustment of bad debt expense during 2024. Determine the amount of accounts receivable written off during 2024. 3. If the company uses the direct write-off method, what would bad debt expense be for 2024?
- eBook Organics Plus is considering which bad debt estimation method works best for its company. It is deciding between the income statement method, balance sheet method of receivables, and balance sheet aging of receivables method. If it uses the income statement method, bad debt would be estimated at 4 percent of credit sales. If it were to use the balance sheet method, it would estimate bad debt at 12 percent of accounts receivable. If it were to use the balance sheet aging of receivables method, it would split its receivables into three categories: 0-30 days past due at 6 percent, 31-90 days past due at 19 percent, and over 90 days past due at 26 percent. There is currently a zero balance, transferred from the prior year's Allowance for Doubtful Accounts. The following information is available from the year-end income statement and balance sheet. 2018 Year-End Total for Organics Plus Credit Sales $1,880,000 Accounts Receivable 620,000 There is also additional Information regarding…Organics Plus is considering which bad debt estimation method works best for its company. It is deciding between the income statement method, balance sheet method of receivables, and balance sheet aging of receivables method. If it uses the income statement method, bad debt would be estimated at 4 percent of credit sales. If it were to use the balance sheet method, it would estimate bad debt at 12 percent of accounts receivable. If it were to use the balance sheet aging of receivables method, it would split its receivables into three categories: 0–30 days past due at 6 percent, 31–90 days past due at 19 percent, and over 90 days past due at 26 percent. There is currently a zero balance, transferred from the prior year’s Allowance for Doubtful Accounts. The following information is available from the year-end income statement and balance sheet. 2018 Year-End Total for Organics Plus Credit Sales $1,810,000 Accounts Receivable 600,000 There is also additional information…Shimmer Products is considering which bad debt estimation method works best for its company. It is deciding between the income statement method, balance sheet method of receivables, and balance sheet aging of receivables method. If it uses the income statement method, bad debt would be estimated at 5.6% of credit sales. If it were to use the balance sheet method, it would estimate bad debt at 13.7% percent of accounts receivable. If it were to use the balance sheet aging of receivables method, it would split its receivables into three categories: 0–30 days past due at 5%, 31–90 days past due at 21%, and over 90 days past due at 30%. There is currently a zero balance, transferred from the prior years Allowance for Doubtful Accounts. The following information is available from the year-end income statement and balance sheet. There is also additional information regarding the distribution of accounts receivable by age. Prepare the year-end adjusting entry for bad debt, using A. Income statement method B. Balance sheet method of receivables C. Balance sheet aging of receivables method D. Which method should the company choose, and why?
- Angelos Outlet used to report bad debt using the balance sheet method and is now switching to the income statement method. The percentage uncollectible will remain constant at 5%. Credit sales figures for 2019 were $866,000, and accounts receivable was $732,000. How much will Angelos Outlet report for 2019 bad debt estimation under the income statement method?Angelo’s Outlet used to report bad debt using the balance sheet method and is now switching to the income statement method. The percentage uncollectible will remain constant at 5%. Credit sales figures for 2019 were $866,000, and accounts receivable was $732,000. How much will Angelo’s Outlet report for 2019 bad debt estimation under the income statement method?Peter Enterprises uses the Allowance Method for accounting for Bad Debts. Peter also uses the percentage of credit sales method for prediction. At the end of the year 2020, Peter Enterprises estimates that Doubtful Debts are 5% of the total credit sales $10,100,000 (2020 Year). The correct entry to record the prediction of the Bad Debts Expense on 31st December 2020, is: Select one: O a. Debit Allowance for Doubtful Debts $505,000 Credit Bad Debt Expense $505,000 O b. Debit Bad Debt Expense $505,000 Credit Accounts Receivable $505,000 O C. Debit Accounts Receivable $505,000 Credit Allowance for Doubtful Debts $505,000 O d. Debit Bad Debt Expense $505,000 Credit Allowance for Doubtful Debts $505,000