S9-6 Applying the allowance method (percent-of-sales) to account for Learning Obje uncollectibles During its first year of operations, Fall Wine Tour earned net credit sales of $311,000. Industry experience suggests that bad debts will amount to 3% of net credit sales. At December 31, 2018, accounts receivable total $44,000. The company uses the allowance method to account for uncollectibles. Requirements 1. Journalize Fall Wine Tour's Bad Debts Expense using the percent-of-sales method. 2. Show how to report accounts receivable on the balance sheet at December 31, 2018.

S9-6 Applying the allowance method (percent-of-sales) to account for Learning Obje uncollectibles During its first year of operations, Fall Wine Tour earned net credit sales of $311,000. Industry experience suggests that bad debts will amount to 3% of net credit sales. At December 31, 2018, accounts receivable total $44,000. The company uses the allowance method to account for uncollectibles. Requirements 1. Journalize Fall Wine Tour's Bad Debts Expense using the percent-of-sales method. 2. Show how to report accounts receivable on the balance sheet at December 31, 2018.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter8: Revenue Recognition, Receivables, And Advances From Customers

Section: Chapter Questions

Problem 31E

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Percentage of Credit Sales Method Ruby Red manufactures, markets, and distributes citrus flavored soft drinks across the globe. Ruby Red hired a collection agency in 2018 to increase collection rates from customers. As a result, Ruby estimates that only 2% of its 2019 credit sales will be written off, compared to the 4% of 2018s credit sales that were estimated to be uncollectible. At December 31, 2019, Ruby Red has a $12,800 credit balance in its allowance for doubtful accounts and credit sales of $1,570,000. Required: Use the percentage of credit sales method to calculate the bad debt expense.
Allowance Method for Accounting for Bad Debts At the beginning of 2016, EZ Tech Companys Accounts Receivable balance was $140,000, and the balance in Allowance for Doubtful Accounts was $2,350 (Cr.). EZ Techs sales in 2016 were $1,050,000, 80% of which were on credit. Collections on account during the year were $670,000. The company wrote off $4,000 of uncollectible accounts during the year. Required Prepare summary journal entries related to the sale, collections, and write-offs of accounts receivable during 2016. Prepare journal entries to recognize bad debts assuming that (a) bad debts expense is 3% of credit sales and (b) amounts expected to be uncollectible are 6% of the year-end accounts receivable. What is the net realizable value of accounts receivable on December 31, 2016, under each assumption in part (2)? What effect does the recognition of bad debts expense have on the net realizable value? What effect does the write-off of accounts have on the net realizable value?
McKinney Co. estimates its uncollectible accounts as a percentage of credit sales. McKinney made credit sales of 1,500,000 in 2019. McKinney estimates 2.5% of its sales will be uncollectible. Prepare the journal entry to record bad debt expense for McKinney at the end of 2019.
Activity 2 Directions: Compute the uncollectible account expense using the percent of accounts receivable method. The following information needed in the computation of uncollectible accounts expense for March 2021 is available for Parkland Enterprises: Sales Cash Sales Accounts Receivable-ending 200,000.00 50,000.00 5,000.00 Assume that the company decided that five percent (5%) of accounts receivable are deemed uncollectible.
A company has net credit sales of $750,000 for the year and it estimates that uncollectible accounts will be 3% of sales. If Allowance for Doubtful Accounts has a credit balance of $3,000 prior to adjustment, its balance after adjustment will be a credit of Select one: a. $19,500. b. $22,500. C. $22,560. d. $25,500. OO O 0
Applying the allowance method (percent-of-sales) to account for uncollectibles</b></p><p>During its first year of operations, Fall Wine Tour earned net credit sales of $311,000. Industry experience suggests that bad debts will amount to 3% of net credit sales. At December 31, 2018, accounts receivable total $44,000. The company uses the allowance method to account for uncollectible. Requirements Journalize Fall Wine Tour’s Bad Debts Expense using the percent of sales method. Show how to report accounts receivable on the balance sheet at December 31, 2018.
Required: Assume credit sales for 2019 were $312,000 and that on December 31, 10% of credit sales are estimated to be uncollectible. Using the percentage of sales method:Determine the amount to be charged to the uncollectible expense account.Prepare the Allowance for uncollectible account. Prepare the balance sheet extract to show the net realizable value of the Accounts Receivable as at December 31 Journal Entries Date Particulars Debit($) Credit($) 10.1.20 Accounts Receivable 11000 To sales 11000 15.5.20 Allowance for uncollectible accounts(2500+400) 2900 To accounts receivable 2900 4.8.20 Cash(70% of 11000) 7700 Allowance for uncollectible accounts(30% of $11000) 3300 To Accounts Receivable 1100 26.10.20 Accounts Receivable(30% of $400) 120 To allowance for uncollectible accounts 120 26.10.20 Cash 120 To accounts receivable 120…
Problem 12Rosalie Co. uses the gross method to record sales made on credit. On June 10, 2020, it made sales of P100,000 with terms 2/10, n/30 to Finley Farms, Inc. On June 19, 2020, Rosalie received payment for 1/2 the amount due from Finley Farms. Rosalie’s fiscal year end is on June 30, 2020. What amount will be reported in the statement of financial position for the accounts receivable due from Finley farms, Inc.? _________Problem 13On the December 31, 2020 balance sheet of Mann Co., the current receivables consisted of the following: Trade accounts receivable 93,000 Allowance for uncollectible accounts (2,000) Claim against shipper for goods lost in transit (November 2020) 3,000 Selling price of unsold goods sent by Mann on consignment at 130% of cost (not included in Mann’s ending inventory) 26,000 Security deposit on lease of warehouse used for storing some inventories 30,000Total 150,000On December 31, 2020, the correct total of Mann’s current net receivables was _________.…
Problem 4-11 (PHILCPA Adapted) At year-end, Harem Company reported accounta receivable of PS, 200,000 with the following analysis: Accounta known to be worthlesa Advance paymenta on purchase orders Advances to subaidiary Customers' accounts reporting credit balances ariaing from sales returns Trade accounts receivable Subscription receivable due in 30 dayn Trade installments receivable due 1-18 montha, including unearned finance charge of P50,000 Trade accounta receivable from officers, due currently Trade accounts on which postdated checks are held and no entries were made on receipt of checke 100.000 400 000 1,000.000 ( 600,000 3,500,000 2200.000 850,000 150,000 200,000 What is the correct balance of trade accounts receivable? . 4,650,000 p. 4,700,000 . 4,150,000 1 4,050,000
Total sales for 2021 Credit sales Sales returns (credit sales) It is the practice of the business to provide 3% of net credit sales as allowance for douteful accounts During the year the business has written off $8,700 as bad debts and has collected $1,450 which was written off in the perious year. The business show closing balances for 2020 in Accounts Receivable Allowance for bad debts Opening balance Allowance for 800 sales 1,465,000 1,185,000 36,000 Please find out the closing balance in both Accounts Receivable and in Allowance for Bad Debts accounts for 2021 opening balance Accounts Receivable Closing balance $345,600 21,450 Accounts Receivable 345,000 Allowance for BDD 1,450 Cash 1,185,000 closing balance 1,531,450 1,521,300 Allowance for Bad debts a/c 8,700 opening balance 48670 Bad debts exp Acounts receivable 57,370 Topening balance 8,700 1,450 1521300 1.531.450 21,450 34,470 1,450 57,370 48,670 net credit sales bad debt exp provision is 3% Accounts Receivable Sales saes…
before adjustments at year-end: Problem 5-1 (IAA) Marvelous Company reported the following information Accounts receivable Notes receivable Allowance for doubtful accounts 500,000 200,000 20,000 5,000,000 Sales Sales return and allowances Sales discount 30,000 20,000 Required: Prepare adjusting entry to provide for doubtful accounts under each of the following independent assumptions: a. Past experience indicates that 75% of all sales are credit sales and that an average 2% 'of credit sales may prove uncollectible. b. One percent of gross sales may prove uncollectible. c. An analysis of the aging of trade receivables indicates that accounts receivable in the amount of P80,000 may prove uncollectible. d. The policy is to maintain an allowance for doubtful accounts equal to 10% of the outstanding accounts receivable.
1. Kinney Corporation estimates its uncollectible accounts as a percentage of its credit sales. The rate it uses is 3% and in 2018, its credit sales were $1,500,000. Required: a. Prepare journal entries to record the bad debts expense for the year. b. If Allowance for an uncollectible account has a credit balance of $60,000 before entries in (a) above, show how Accounts Receivable will be presented in the Balance Sheet of Kinney Corporation.