Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Question
Chapter 6, Problem 8P
1.
To determine
Prepare the
(a) Allowance for doubtful accounts.
(b) Accounts receivable
2.
To determine
Indicate the ending balance for 2020 for the following accounts in requirement 1 and also specify the manner by which these items will be reported in the financial statement.
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The following information is available for Sheridan Company:
Allowance for Expected Credit Losses at December 31, 2023
Credit Sales during 2024
Accounts Receivable deemed worthless and written off during 2024
$7980
O $4788
$3762
$8550
O $84360
307800
3192
As a result of a review and aging of Accounts Receivable in early January 2025, it was determined that an Allowance for Expected
Credit Losses balance of $8550 is required at December 31, 2024. What amount should Sheridan record as loss on impairment for
calendar 2024?
The errors below were noted after the books of CalMart Corporafion were audited at the close of 2021 Indicate the effects of each of the following errors with an O for Overstatement, U for understatement and N for no effect in the appropriate column.
2020
2021
Earnings Retained Eamings after Net Income
Asset
Eamings Retained Earnings after
closing
Liability
Retained
before closing
Net Income
Asset
Liability
Retained
before dosing
closing
Failure to record purchases of
merchandise on account of
P2,000 at the end of 2020.
Sale of merchandise on account
on December 30,2020 amounting
to P2,000 was not recorded until
the customer paid his account on
January 2021.
Depreciation expense
equipment in 2020
overstated by P1.000.
Paidone year insurance premium
of P2,000 effective April 1,2020.
on
was
The entire amount was debited to
expense account and no
adjustment was made at the end
of 2020.
On December 31,2020, the
Company acquired a parcel of
land and a building at a total cost
of P5,000,000.…
Lemon company uses the balance sheet/aging approach to estimate uncollectible accounts
receivable. Based upon recent collection history, Lemon's accountant has prepared an aging of
accounts receivable as of December 31, 2019, and has estimated uncollectible accounts receivable of
S81,250 as of that date -ie ending balance of Allowance for Doubtful Accounts (ADA).
Additional facts needed for questions 1 and 2 below
- The balance in the allowance for doubtful accounts (ADA) on January 1, 2019 (beg. balance) was
$38,500.
· Accounts written off during 2019 amounted to $3,500
Instructions
1. Prepare the entry to record the write off of $3,500 during 2019
2. Prepare the adjusting entry to record the uncollectible accounts expense for 2019 (considering that
the ending balance in ADA is $81,250 as mentioned above).
3. Determine the net accounts receivable (net realizable value) that will appear on Lemon's
12/31/19 balance sheet (statement of financial position), if the (gross) accounts…
Chapter 6 Solutions
Intermediate Accounting: Reporting And Analysis
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- Average Uncollectible Account Losses and Bad Debt Expense The accountant for Porile Company prepared the following data for sales and losses from uncollectible accounts: Required: 1. Calculate the average percentage of losses from uncollectible accounts for 2015 through 2018. 2. Assume that the credit sales for 2019 are $1,260,000 and that the weighted average percentage calculated in Requirement 1 is used as an estimate of loses from uncollectible accounts for 2019 credit sales. Determine the bad debt expense for 2019 using the percentage of credit sales method. 3. CONCEPTUAL CONNECTION Do you believe this estimate of bad debt expense is reasonable? 4. CONCEPTUAL CONNECTION How would you estimate 2019 bad debt expense if losses from uncollectible accounts for 2018 were What other action would management consider?arrow_forwardIn connection with your examination of the financial statements of Ringo, Inc. for the year ended December 31, 2020, you were able to obtain certain information during your audit of the accounts receivable and related accounts. The December 31, 2020 balance in the Accounts Receivable control account is P837,900.An aging schedule of the accounts receivable as of December 31, 2020 is presented below: Age Net Debit Balance Percentage to be applied after corrections have been made 60 days & under P387,800 1 percent 61 to 90 days 307,100 2 percent 91 to 120 days 89,800 5 percent Over 120 days 53,200 Definitely uncollectible, P9,000; the remainder is estimated to be 25% uncollectible. P837,900 The Allowance for Doubtful Accounts schedule is presented below: Debit Credit Balance January 1,…arrow_forwardIn connection with your examination of the financial statements of Ringo, Inc. for the year ended December 31, 2020, you were able to obtain certain information during your audit of the accounts receivable and related accounts. The December 31, 2020 balance in the Accounts Receivable control account is P837,900.An aging schedule of the accounts receivable as of December 31, 2020 is presented below: Age Net Debit Balance Percentage to be applied after corrections have been made 60 days & under P387,800 1 percent 61 to 90 days 307,100 2 percent 91 to 120 days 89,800 5 percent Over 120 days 53,200 Definitely uncollectible, P9,000; the remainder is estimated to be 25% uncollectible. P837,900 The Allowance for Doubtful Accounts schedule is presented below: Debit Credit Balance January 1, 2020…arrow_forward
- Lemon company uses the balance sheet/aging approach to estimate uncollectible accounts receivable. Based upon recent collection history, Lemon’s accountant has prepared an aging of accounts receivable as of December 31, 2019, and has estimated uncollectible accounts receivable of $81,250 as of that date -ie ending balance of Allowance for Doubtful Accounts (ADA). Additional facts needed for questions 1 and 2 below The balance in the allowance for doubtful accounts (ADA) on January 1, 2019 (beg. balance) was $39,500. Accounts written off during 2019 amounted to $3,500 Instructions Prepare the entry to record the write off of $3,500 during 2019 Prepare the adjusting entry to record the uncollectible accounts expense for 2019 (considering that the ending balance in ADA is $81,250 as mentioned above). Determine the net accounts receivable (net realizable value) that will appear on Lemon’s 12/31/19 balance sheet (statement of financial position), if the (gross) accounts…arrow_forwardAnalyzing Accounts Receivable Upham Companys June 30, 2019, balance sheet included the following information: Required: 1. Prepare the journal entries necessary for Upham to record the preceding transactions. 2. Prepare an analysis and schedule that shows the amounts of the accounts receivable, allowance for doubtful accounts, notes receivable, and notes receivable dishonored accounts that will be disclosed on Uphams June 30, 2020, balance sheet.arrow_forwardGoods for Less uses the balance sheet aging method to account for uncollectible debt on receivables. The following is the past-due category information for outstanding receivable debt for 2019. To manage earnings more favorably, Goods for Less considers changing the past-due categories as follows. A. Complete each table by filling in the blanks. B. Determine the difference between totals uncollectible. C. Describe the categories change effect on net income and accounts receivable.arrow_forward
- The following accounts receivable information pertains to Select Distributors. A. Determine the estimated uncollectible bad debt for Select Distributors in 2018 using the balance sheet aging of receivables method. B. Record the year-end 2018 adjusting journal entry for bad debt. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $233,180; record the year-end entry for bad debt, taking this into consideration. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $199,440; record the year-end entry for bad debt, taking this into consideration. E. On March 21, 2019, Select Distributors identifies Aida Normans account as uncollectible in the amount of $10,890. Record the entry for identification.arrow_forwardElegant Linens uses the balance sheet aging method to account for uncollectible debt on receivables. The following is the past-due category information for outstanding receivable debt for 2019. To manage earnings more favorably, Elegant Linens considers changing the past-due categories as follows. A. Complete each table by filling in the blanks. B. Determine the difference between total uncollectible. C. Complete the following 2019 comparative income statements for 2019, showing net income changes as a result of the changes to the balance sheet aging method categories. D. Describe the categories change effect on net income and accounts receivable.arrow_forwardMirror Mart uses the balance sheet aging method to account for uncollectible debt on receivables. The following is the past-due category information for outstanding receivable debt for 2019. To manage earnings more efficiently, Mirror Mart decided to change past-due categories as follows. Complete the following. A. Complete each table by filling in the blanks. B. Determine the difference between total uncollectible. C. Explain how the new total uncollectible amount affects net income and accounts receivable.arrow_forward
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