ACC 220 Lecture Notes - Lecture 52: Accounts Receivable

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orangegnat648

24 Feb 2019

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The amount needed in a company"s allowance account is calculated using the age of its outstanding accounts receivable and determining the amount of each age that is considered uncollectible based on past experience and communication with customers. The total uncollectible amount from the aging schedule represents the amount of allowance that the company should report in the current period"s balance sheet. Analysis that illustrates how must time has elapsed since a credit sale originally occurred, which is how long the receivable has been unpaid. Example: golly gizmos prepares the below aging schedule of its outstanding accounts receivable. Using this information, what amount of allowance should. Example: using the information in the previous example, assume golly gizmos has ,000 in their allowance for doubtful accounts account prior to any adjusting journal entry for the current period"s bad debts expense.

Related Questions

Required information

Problem 9-3A Aging accounts receivable and accounting for bad debts LO P2, P3

[The following information applies to the questions displayed below.]

Jarden Company has credit sales of $3,100,000 for year 2017. On December 31, 2017, the companyâs Allowance for Doubtful Accounts has an unadjusted credit balance of $19,564. Jarden prepares a schedule of its December 31, 2017, accounts receivable by age. On the basis of past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here.

December 31, 2017 Accounts Receivable		Age of Accounts Receivable	Expected Percent Uncollectible
$	620,000	Not yet due	0.85	%
	248,000	1 to 30 days past due	1.60
	49,600	31 to 60 days past due	6.10
	24,800	61 to 90 days past due	30.75
	4,960	Over 90 days past due	64.00

Problem 9-3A Part 1

Required:
1. Estimate the required balance of the Allowance for Doubtful Accounts at December 31, 2017, using the aging of accounts receivable method.

Problem 9-3A Part 2

2. Prepare the adjusting entry to record bad debts expense at December 31, 2017.

tanpanda195

Jarden Company has credit sales of $2,800,000 for year 2017. On December 31, 2017, the companyâs Allowance for Doubtful Accounts has an unadjusted credit balance of $16,232. Jarden prepares a schedule of its December 31, 2017, accounts receivable by age. On the basis of past experience, it estimates the percent of receivables in each age category that will become uncollectible. This information is summarized here.

DECEMBER 31, 2017 Accounts Receivable	âAge of Accounts Receivable	âExpected Percent Uncollectible
$560,000	Not yet due	0.85%
224,000	1 to 30 days past due	1.60
44,800	31 to 60 days past due	6.10
22,400	61 to 90 days past due	30.75
4,480	Over 90 days past due	64.00

1. Estimate the required balance of the Allowance for Doubtful Accounts at December 31, 2017, using the aging of accounts receivable method.

	âACCOUNTS RECEIVABLE		âPERCENT UNCOLLECTIBLE (#.##%)		âESTIMATED UNCOLLECTIBLE
âNot due:		X		ââ=
â1 to 30:		âX		=
31 to 60:		âX		=
â61 to 90:		âX		=
âOver 90:		X		=

âESTIMATED BALANCE OF ALLOWANCE FOR UNCOLLECTIBLES: __________ CREDIT OR DEBIT? _________

2. Prepare the adjusting entry to record bad debts expense at December 31, 2017.

Record the estimated bad debts.

âDATE	âGENERAL JOURNAL	âDEBIT	âCREDIT
âDec 31

erinlizard726

Exercise 8-5

Blossom Company has accounts receivable of $191,000 at September 30, 2017. An analysis of the accounts shows the following:

Month of Sale	Balance
September		$134,730
August		28,293
July		15,851
April, May, and June		12,126
		$191,000

Credit terms are 2/10, n/30. The unadjusted balance in the Allowance for Doubtful Accounts on September 30, 2017, is $2,260 debit. The company uses an aging schedule to estimate uncollectible accounts. The company’s percentage estimates of bad debts are as follows:

Number of Days Outstanding	Estimated % Uncollectible
0–30		3%
31–60		10%
61–90		25%
Over 90		60%

(a)

Prepare an aging schedule to determine the total estimated uncollectible accounts at September 30, 2017. (Round answers to 0 decimal places, e.g. 5,275.)

Age of Accounts	Amount		%		Estimated Uncollectible
0-30 days outstanding		$134,730		3%	$
31-60 days outstanding		28,293		10%
61-90 days outstanding		15,851		25%
Over 90 days outstanding		12,126		60%
					$

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ACC 220 Lecture Notes - Lecture 52: Accounts Receivable

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Exercise 8-5

(a)