ACCO 310 Study Guide - Final Guide: The May Department Stores Company, Accounts Receivable, Operating Expense

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23 Sep 2015

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Claim against shipper for goods purchased by yu co. and lost in transit (november 2006) Selling price of unsold goods sent by yu co. on consignment at 130 percent of cost (not included in yu co"s ending inventory) Security deposit on lease of warehouse used for storing some inventories. Estimated uncollectible accounts during 2006 (2% on credit sales of ,000,000) After year-end adjustment, the bad debt expense for 2006 should be: ,000, ,000. ,000,000: ,000, ,000, linn co. "s allowance for doubtful accounts was ,000 at the end of 2006 and ,000 at the end of 2005. For the year ended december 31, 2006, linn reported bad debt expense of ,000 in its income statement. Uler estimates that 1 percent of the gross accounts receivable will become uncollectible. Immediate recognition as an expense: how should research and development costs be accounted for, according to part 2 of the cica.

Related Questions

Learning Objective 4: Apply GAAP to uncollectible receivables at December 31, 2016, before any year-end adjustments, the Accounts Receivable balance of Haley Travel, Inc., is $400,000. The Allowance for Doubtful Accounts has a $19,600 credit balance. Haley Travel prepares the following aging schedule for Accounts Receivable:

Age of Accounts

Total Balance 1-30 Days 31-60 Days 61-90 Days Over 90 Days

$400,000 $180,000 $120,000 $80,000 $20,000

Estimated uncollectible 0.5% 5.0% 11.0% 50.0%

Requirements:

1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowance account adequate? Too high? Too low?

2. Make the entry required by the aging schedule. Prepare a T-account for the allowance.

3. Show how Haley Travel will report Accounts Receivable on its December 31 balance sheet

Solution:

	Req. 1




			1-30	31-60	61-90	Over 90	Total
			days	days	days	days	balance

	Est. % uncollectible		x .005	x .05	x .11	x .50
	Bal. in Allow. for Doubtful Accounts should be
	Bal. in Allow. for Doubtful Accounts should be		$ 0	$ 0	$ 0	$ 0	$ -
	Current balance
	Amount needed in adj. entry

	Req. 2
	Journal
	DATE	ACCOUNT TITLES AND EXPLANATION				DEBIT	CREDIT
	Dec. 31
							-



		Allowance for Doubtful Accounts


			Bal.



	Req. 3
	BALANCE SHEET
	Current assets:
		Cash					$ XX
		Short-term investments					XX
		Accounts receivable, net of allowance
		for doubtful accounts of $					*
	Or
	*Another way to report accounts receivable is
		Accounts receivable
		Less: Allowance for doubtful accounts

coffeesalmon341

Age of Accounts

Total Balance 1-30 Days 31-60 Days 61-90 Days Over 90 Days

$400,000 $180,000 $120,000 $80,000 $20,000

Estimated uncollectible 0.5% 5.0% 11.0% 50.0%

Requirements:

1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowance account adequate? Too high? Too low?

2. Make the entry required by the aging schedule. Prepare a T-account for the allowance.

3. Show how Haley Travel will report Accounts Receivable on its December 31 balance sheet

Solution:

	Req. 1




			1-30	31-60	61-90	Over 90	Total
			days	days	days	days	balance

	Est. % uncollectible		x .005	x .05	x .11	x .50
	Bal. in Allow. for Doubtful Accounts should be
	Bal. in Allow. for Doubtful Accounts should be		$ 0	$ 0	$ 0	$ 0	$ -
	Current balance
	Amount needed in adj. entry

	Req. 2
	Journal
	DATE	ACCOUNT TITLES AND EXPLANATION				DEBIT	CREDIT
	Dec. 31
							-



		Allowance for Doubtful Accounts


			Bal.



	Req. 3
	BALANCE SHEET
	Current assets:
		Cash					$
		Short-term investments
		Accounts receivable, net of allowance
		for doubtful accounts of $					*
	Or
	*Another way to report accounts receivable is
		Accounts receivable
		Less: Allowance for doubtful accounts

emeraldsnail514

The following transactions were completed by Daws Company during the current fiscal year ended December 31:

Jan. 29.		Received 35% of the $9,000 balance owed by Kovar Co., a bankrupt business, and wrote off the remainder as uncollectible.
Apr. 18.		Reinstated the account of Spencer Clark, which had been written off in the preceding year as uncollectible. Journalized the receipt of $4,000 cash in full payment of Clark's account.
Aug. 9.		Wrote off the $11,850 balance owed by Iron Horse Co., which has no assets.
Nov. 7.		Reinstated the account of Vinyl Co., which had been written off in the preceding year as uncollectible. Journalized the receipt of $7,000 cash in full payment of the account.
Dec. 31.		Wrote off the following accounts as uncollectible (one entry): Beth Connelly Inc., $12,100; DeVine Co., $8,110; Moser Distributors, $21,950; Oceanic Optics, $10,000.
31.		Based on an analysis of the $1,450,000 of accounts receivable, it was estimated that $60,000 will be uncollectible. Journalized the adjusting entry.

Instructions

Record the January 1 credit balance of $54,200 in a T account for Allowance for Doubtful Accounts.

Journalize the transactions. Post each entry that affects the following selected T accounts and determine the new balances:

Allowance for Doubtful Accounts

Bad Debt Expense

Determine the expected net realizable value of the accounts receivable as of December 31.

Check Figure: $1,390,000

Assuming that instead of basing the provision for uncollectible accounts on an analysis of receivables the adjusting entry on December 31 had been based on an estimated expense of Â½ of 1% of the sales of $13,200,000 for the year, determine the following:

Bad debt expense for the year.

Balance in the allowance account after the adjustment of December 31.

Expected net realizable value of the accounts receivable as of December 31.

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ACCO 310 Study Guide - Final Guide: The May Department Stores Company, Accounts Receivable, Operating Expense

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