Required: 1. Prepare journal entry to set up the allowance for doubtful accounts on January 1, 2020. 2. Compute the doubtful accounts expense for the current year, 3. Determine the net realizable value of accounts receivable on December 31, 2020.
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- 34.Prior to the year-end adjustments of accounts, an entity's Allowance for Doubtful Accounts has a debit balance resulting from a significant amount of accounts receivable that was written off. Based on aging of the receivables and the entity's experience of the extent of uncollectibles, an amount was determined as the required credit balance in Allowance for Doubtful Accounts at year-end.Which of the following statements is true relating to the above-described situation? a. Doubtful accounts expense is equal to the amount determined by aging and analysis of the receivables. b. Doubtful accounts expense is the total amount determined by aging and analysis of the receivables plus the allowance balance before adjustment. c. Doubtful accounts expense is the amount determined by aging and analysis of the receivables less the allowance balance before adjustment. d. Doubtful accounts expense amount cannot be determined.What is the allowance for doubtful accounts on December 31, 2020? From inception of operations, Axis Company carried no allowance for doubtful accounts. Uncollectible accounts were expensed as written off and recoveries were credited to income as collected. During 2020, management recognized that the accounting policy with respect to doubtful accounts was not correct and determined that an allowance for doubtful accounts was necessary. A policy was established to maintain an allowance for doubtful accounts based on historical bad debts loss percentage applied to year-end accounts receivable. The historical bad debt loss percentage is to be recomputed each year based on all available past years up to a maximum of five years. Year Credit sales Writeoffs Recoveries 1,500,000 2,250,000 2,950,000 2016 15,000 38,000 52,000 2017 2,700 2,500 2018 3,300,000 4,000,000 65,000 83,000 2019 4,800 5,0 2020 The entity reported accounts receivable of P1,250,000 on December 31, 2019 and P2,000,000 on…An aging of a company's accounts receivable indicates that $9700 is estimated to be uncollectible. If Allowance for Doubtful Accounts has a $3010 balance, the adjustment to record bad debts for the period will require a(n)
- allowance for doubtful accounts. From inception of operations, Savvy Company carried no Uncollectible receivables were expensed as written off and recoveries were credited to income as collected. During the current year, management recognized that the accounting policy with respect to doubtful accounts was not correct, and determined that an allowance for doubtful accounts was necessary. A policy was established to maintain an allowance for doubtful accounts based on historical bad debt loss percentage applied to year-end accounts receivable. The historical bad debt loss percentage is to be recomputed each year based on all available past years up to a maximum of five years. Accounts Year Credit sales written off Recoveries 15,000 40,000 50,000 65,000 88,000 0. 1,500,000 2,200,000 3,000,000 3,300,000 4,000,000 2016 2,000 3,000 5,000 10,000. 2017 2018 2019 2020 Accounts receivable balances were P1,250,000 and P2,000,000 on January 1, 2020 and December 31, 2020, respectively. Required:…An aging of a company's accounts receivable indicates that $7,327 are estimated to be uncollectible. If Allowance for Doubtful Accounts has a $858 debit balance, the adjustment to record bad debts for the period will require a credit to the Allowance for Doubtful Accounts of:The following misstatements are sometimes found in the sales and collection cycle’s account balances:a. Cash received from collections of accounts receivable in the subsequent period is recorded as current period receipts.b. The allowance for uncollectible accounts is inadequate because of the client’s failure to reflect depressed economic conditions in the allowance.c. Several accounts receivable are in dispute as a result of claims of defective merchandised. The pledging of accounts receivable to the bank for a loan is not disclosed in the financial statements.e. Goods shipped and included in the current period sales were returned in the subsequent period.f. Several accounts receivable in the accounts receivable master file are not included in the aged trial balance.g. One account receivable in the accounts receivable master file is included on the aged trial balance twice. h. Long-term interest-bearing notes receivable from affiliated companies are included in accounts receivable.i.…
- On October 12 of the current year, a company determined that a customer's account receivable was uncollectible and that the account should be written off. Assuming the direct write-off method is used to account for bad debts, what effect will this write-off have on the company's net income and total assets? Mutiple Choice Decrease in net income; no effect on total assets. No effect on net income; no effect on total assets. Decrease in net income; decrease in total assets. Increase in net income; no effect on total assets. No effect on net income; decrease in total assets4 Indicate the classification, presentation and disclosure of Problem 8-12 (IAA) Lucid Company showed the following balances on December 31: Accounts receivable-unassigned Accounts receivable-assigned Allowance for doubtful accounts-January 1 Receivable from factor Note payable-bank 1,000,000 300,000 30,000 40,000 240,000 During the current year, the entity found itself in financial distress and decided to resort to receivable financing. On June 30, the entity factored P200,000 of accounts receivable to a finance entity. The finance entity charged a factoring fee of 5% of the accounts factored and withheld 20% of the amount factored. On December 31, the entity assigned P300,000 of accounts receivable to a bank under a nonnotification basis. The bank advanced 80% less a service fee of 5% of the accounts assigned. The entity signed a promissory note for the loan. On December 31, it is estimated that 5% of the outstanding accounts receivable may prove uncollectible. Required: the accounts…29. In accordance with the GAM for NGAs and the Revised Chart of Accounts, how does a government entity recognize the uncollectability of accounts receivable? By debiting the “Bad debts Expense” account Be debiting the “Impairment Loss-Loans and Receivable Account.” By debiting the “Allowance for Impairment-Accounts Receivable Account. b and c
- After Bunker Hill Assay Services Inc. had completed all postings for March in the current year (20Y4), the sum of the balances in the following accounts payable ledger did not agree with the 36,600 balance of the controlling account in the general ledger: Assuming that the controlling account balance of 36,600 has been verified as correct, (a) determine the error(s) in the preceding accounts and (b) prepare a listing of accounts payable creditor balances (from the corrected accounts payable subsidiary ledger).Waddell Industries has a past history of uncollectible accounts, as follows. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule you completed in Exercise 9-8. The accounts receivable clerk for Waddell Industries prepared the following partially completed aging of receivables schedule as of the end of business on August 31: The following accounts were unintentionally omitted from the aging schedule and not included in the preceding subtotals: a. Determine the number of days past due for each of the preceding accounts as of August 31. b. Complete the aging of receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals.When a company receives a deposit from a customer to protect itself against nonpayment for future services, the deposit should be classified by the company as: a. revenue b. a liability c. part of the allowance for doubtful accounts d. a deferred credit deducted from accounts receivable