Question :
117. The schedule that follows shows trial balances for Galbraith Company : 1230625
117. The schedule that follows shows trial balances for Galbraith Company at the end of Year 1 and Year 2. Note that the two trial balances shown for Year 1 are the Adjusted, Preclosing Trial Balance (after making all adjusting entries) and the final Post-Closing Trial Balance, from which the firm constructs the balance sheet. The trial balance shown for the end of Year 2 is taken before adjusting entries of any kind, although the firm has periodically written off specific customers’ Accounts Receivable during the year as those customers’ accounts become obviously uncollectible.Galbraith Company closes its books annually and makes all of its sales on account. At the end of Year 2, the management of Galbraith Company, along with the independent auditor, analyzes the currently outstanding Accounts Receivable. The aging schedule classifies accounts as “not yet due,” “overdue less than 30 days,” “overdue 30 days or more.” Galbraith Company estimates that one-half of one percent of current accounts will become uncollectible, 5 percent of accounts overdue less than 30 days will become uncollectible, and 40 percent of accounts overdue 30 days or more will become uncollectible. From this aging of accounts receivable, the firm estimated that it will not collect $30,000 of the accounts. The auditor will use this information in making adjusting entries for Year 2.Required:See the requirements below. If there is insufficient information for a given question, state just that.
a.
What was the dollar amount of Accounts Receivable written off during Year 2 as obviously uncollectible?
b.
What was the total amount of cash collected from customers during Year 2?
c.
What is the dollar amount of net Accounts Receivable shown on the balance sheet at the end of Year 1?
d.
What is the dollar amount of the Bad Debt Expense for Year 2?
e.
What is the dollar amount of the net Accounts Receivable shown on the balance sheet for the end of Year 2?
118. The sales, all on account, of Pins Company in Year 6, its first year of operations, were $700,000. Collections totaled $500,000. On December 31, Year 6, Pins Company estimated that 2 percent of all sales would probably be uncollectible. On that date, Pins Company wrote off specific accounts in the amount of $8,000.Pins Company’s unadjusted trial balance (after all nonadjusting entries were made and after all write-offs of specific accounts receivable identified during Year 7 as being uncollectible) on December 31, Year 7, includes the following accounts and balances:
Accounts Receivable (Dr.)
$300,000
Allowance for Uncollectible Accounts (Dr.)
10,000
Sales (Cr.)
800,000
On December 31, Year 7, Pins Company carried out an aging of its accounts receivable balances and estimated that the Year 7 ending balance of accounts receivable contained $9,000 of probable uncollectibles. It made adjusting entries appropriate for this estimate. Some of the $800,000 sales during Year 7 were for cash and some were on account; the omission is purposeful.Required:
a.
What was the balance in the Accounts Receivable account at the end of Year 6? Give the amount and whether debit or credit.
b.
What was the balance in the Allowance for Uncollectible Accounts account at the end of Year 6? Give the amount and whether debit or credit.
c.
What was bad debt expense for Year 7?
d.
What was the amount of specific accounts receivable written off as being uncollectible during Year 7?
e.
What were total cash collections in Year 7 from customers (for cash sales and collections from customers who had purchased on account in either Year 6 or Year 7)?
f.
What was the net balance of accounts receivable included in the balance sheet asset total for December 31, Year 7?
