Fundamentals Of Financial Accounting
6th Edition
ISBN: 9781259864230
Author: PHILLIPS, Fred, Libby, Robert, Patricia A.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 8, Problem 6E
Computing
Young and Old Corporation (YOC) uses two aging categories to estimate uncollectible accounts. Accounts less than 60 days are considered young and have a 5% uncollectible rate. Accounts more than 60 days are considered old and have a 40% uncollectible rate.
Required:
- 1. If YOC has $100,000 of young accounts and $400,000 of old accounts, how much should be reported in the Allowance for Doubtful Accounts?
- 2. If YOC’s Allowance for Doubtful Accounts currently has an unadjusted credit balance of $40,000, how much should be credited to the account?
- 3. If YOC’s Allowance for Doubtful Accounts has an unadjusted debit balance of $5,000, how much should be credited to the account?
- 4. Explain how YOC’s Allowance for Doubtful Accounts could have a debit balance.
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Computing Bad Debt Expense Using Aging of Accounts Receivable Method
Brown Cow Dairy uses the aging approach to estimate Bad Debt Expense. The balance of each account receivable is aged on the basis of three time periods as follows: (1) 1–30 days old, $12,000; (2) 31–90 days old, $5,000; and (3) more than 90 days old, $3,000. Experience has shown that for each age group, the average loss rate on the amount of the receivable due to uncollectibility is (1) 3 percent, (2) 15 percent, and (3) 30 percent, respectively. At December 31, 2010 (end of the current year), the Allowance for Doubtful Accounts balance was $800 (credit) before the end-of-period adjusting entry is made.
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Twilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The balance of each account
receivable is aged on the basis of three categories as follows: (1) 1-30 days old, (2) 31-90 days old, and (3) more than 90 days old.
Based on experience, management has estimated what portion of receivables of a specific age will not be paid as follows: (1) 1%, (2)
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At December 31, 2019, the unadjusted credit balance in the Allowance for Doubtful Accounts was $230. The total Accounts Receivable
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a. Calculate the estimate of uncollectible accounts at December 31, 2019.
b. Prepare the appropriate adjusting entry dated December 31, 2019.
Complete this question by entering your answers in the tabs below.
Required A Required B
Calculate the estimate of uncollectible accounts at December 31, 2019.
Estimated…
Twilight Company uses the aging of accounts receivable method to estimate Bad Debt Expense. The
balance of each account receivable is aged on the basis of three categories as follows: (1) 1-30 days old, (2)
31-90 days old, and (3) more than 90 days old. Based on experience, management has estimated what
portion of receivables of a specific age will not be paid as follows: (1) 1%, (2) 17%, and (3) 31%, respectively.
At December 31, 2019, the unadjusted credit balance in the Allowance for Doubtful Accounts was $150. The
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Required:
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b. Prepare the appropriate adjusting entry dated December 31, 2019.
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Required A
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Chapter 8 Solutions
Fundamentals Of Financial Accounting
Ch. 8 - What are the advantages and disadvantages of...Ch. 8 - Prob. 2QCh. 8 - Which basic accounting principles does the...Ch. 8 - Using the allowance method, is Bad Debt Expense...Ch. 8 - What is the effect of the write-off of...Ch. 8 - How does the use of calculated estimates differ...Ch. 8 - A local phone company had a customer who rang up...Ch. 8 - What is the primary difference between accounts...Ch. 8 - What are the three components of the interest...Ch. 8 - As of May 1, 2016, Krispy Kreme Doughnuts had...
Ch. 8 - Does an increase in the receivables turnover ratio...Ch. 8 - What two approaches can managers take to speed up...Ch. 8 - When customers experience economic difficulties,...Ch. 8 - (Supplement 8A) Describe how (and when) the direct...Ch. 8 - (Supplement 8A) Refer to question 7. What amounts...Ch. 8 - 1. When a company using the allowance method...Ch. 8 - 2. When using the allowance method, as Bad Debt...Ch. 8 - 3. For many years, Carefree Company has estimated...Ch. 8 - 4. Which of the following best describes the...Ch. 8 - 5. If the Allowance for Doubtful Accounts opened...Ch. 8 - 6. When an account receivable is recovered a....Ch. 8 - Prob. 7MCCh. 8 - 8. If the receivables turnover ratio decreased...Ch. 8 - Prob. 9MCCh. 8 - Prob. 10MCCh. 8 - Prob. 1MECh. 8 - Evaluating the Decision to Extend Credit Last...Ch. 8 - Reporting Accounts Receivable and Recording...Ch. 8 - Recording Recoveries Using the Allowance Method...Ch. 8 - Recording Write-Offs and Bad Debt Expense Using...Ch. 8 - Determining Financial Statement Effects of...Ch. 8 - Estimating Bad Debts Using the Percentage of...Ch. 8 - Estimating Bad Debts Using the Aging Method Assume...Ch. 8 - Recording Bad Debt Estimates Using the Two...Ch. 8 - Prob. 10MECh. 8 - Prob. 11MECh. 8 - Recording Note Receivable Transactions RecRoom...Ch. 8 - Prob. 13MECh. 8 - Determining the Effects of Credit Policy Changes...Ch. 8 - Prob. 15MECh. 8 - (Supplement 8A) Recording Write-Offs and Reporting...Ch. 8 - Recording Bad Debt Expense Estimates and...Ch. 8 - Determining Financial Statement Effects of Bad...Ch. 8 - Prob. 3ECh. 8 - Recording Write-Offs and Recoveries Prior to...Ch. 8 - Prob. 5ECh. 8 - Computing Bad Debt Expense Using Aging of Accounts...Ch. 8 - Computing Bad Debt Expense Using Aging of Accounts...Ch. 8 - Recording and Reporting Allowance for Doubtful...Ch. 8 - Recording and Determining the Effects of Write-Off...Ch. 8 - Recording Note Receivable Transactions, Including...Ch. 8 - Recording Note Receivable Transactions, Including...Ch. 8 - Recording Note Receivable Transactions, Including...Ch. 8 - Using Financial Statement Disclosures to Infer...Ch. 8 - Using Financial Statement Disclosures to Infer Bad...Ch. 8 - Prob. 15ECh. 8 - Analyzing and Interpreting Receivables Turnover...Ch. 8 - (Supplement 8A) Recording Write-Offs and Reporting...Ch. 8 - Recording Accounts Receivable Transactions Using...Ch. 8 - Interpreting Disclosure of Allowance for Doubtful...Ch. 8 - Recording Notes Receivable Transactions Jung ...Ch. 8 - Accounting for Accounts and Notes Receivable...Ch. 8 - Analyzing Allowance for Doubtful Accounts,...Ch. 8 - Recording Accounts Receivable Transactions Using...Ch. 8 - Interpreting Disclosure of Allowance for Doubtful...Ch. 8 - Recording Notes Receivable Transactions CS...Ch. 8 - Accounting for Accounts and Notes Receivable...Ch. 8 - Analyzing Allowance for Doubtful Accounts,...Ch. 8 - Recording Accounts Receivable Transactions Using...Ch. 8 - Prob. 2PBCh. 8 - Prob. 3PBCh. 8 - Accounting for Accounts and Notes Receivable...Ch. 8 - Analyzing Allowance for Doubtful Accounts,...Ch. 8 - Recording and Reporting Credit Sales and Bad Debts...Ch. 8 - Prob. 2COPCh. 8 - Recording Daily and Adjusting Entries Using FIFO...Ch. 8 - Prob. 1SDCCh. 8 - Prob. 2SDCCh. 8 - Ethical Decision Making: A Real-Life Example You...Ch. 8 - Critical Thinking: Analyzing the Impact of Credit...Ch. 8 - Using an Aging Schedule to Estimate Bad Debts and...Ch. 8 - Accounting for Receivables and Uncollectible...
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