Question : 173.A company uses the aging of accounts receivable method to : 1237039

 

173.A company uses the aging of accounts receivable method to estimate its bad debts expense. On December 31 of the current year an aging analysis of accounts receivable revealed the following:  

1—30 days past due270,0002.0%

30—60 days past due145,0008.0%

61—90 days past due55,00020.0%

90—120 days past due32,00050.0%

174.On December 31, of the current year, Spectrum Company’s unadjusted trial balance revealed the following: Accounts receivable of $185,600; Sales Revenue of $1,280,000; (75% were on credit), and Allowance for Doubtful Accounts of $1,600 (credit balance).Prepare the adjusting journal entry to record Spectrum’s estimate for bad debts assuming:1. 6.0% of the accounts receivable balance is assumed to be uncollectible.2. Bad debts expense is estimated to be 1.5% of credit sales.3. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the balance sheet after adjustment assuming the percentage of sales method is used.4. Prepare the entry to write off a $1,500 account receivable on January 1 of the next year.5. Show how Accounts Receivable and the Allowance for Doubtful Accounts would appear on the balance sheet immediately after writing off the account in part 4 assuming the percentage of sales method is used.

175.Each December 31, Kimura Company ages its accounts receivable to determine the amount of its adjustment for bad debts. At the end of the current year, management estimated that $16,900 of the accounts receivable balances would be uncollectible. The Allowance for Doubtful Accounts account had a debit balance of $1,200 before any year-end adjustment for bad debts. Prepare the adjusting journal entry that Kimura Company should make on December 31, of the current year, to estimate bad debts expense.

176.A company that uses the percent of sales to account for its bad debts had credit sales of $740,000 in Year 1, including a $720 sale to Marshall Fresh. On December 31, Year 1, the company estimated its bad debts at 1.5% of its credit sales. On June 1, Year 2, the company wrote off, as uncollectible, the $720 account of Marshall Fresh. On December 21, Year 2, Marshall Fresh unexpectedly paid his account in full. Prepare the necessary journal entries:(a) On December 31, Year 1, to reflect the estimate of bad debts expense.(b) On June 1, Year 2, to write off the bad debt.(c) On December 21, Year 2, to record the unexpected collection.

177.The following series of transactions occurred during Year 1 and Year 2, when Foxworth Co. sold merchandise to Kevin Lewis. Foxworth’s annual accounting period ends on December 31. 

10/01/Yr 1Sold $12,000 of merchandise to K. Lewis, terms 2/10, n/30.

11/15/Yr 1Lewis reports that he cannot pay the account until early next year. He agrees to exchange the account for a 120-day, 12% note receivable.

12/31/Yr 1Prepared the adjusting journal entry to record accrued interest on the note.

03/15/Yr 2Foxworth receives a check from Lewis for the maturity value (with interest) of the note.

03/22/Yr 2Foxworth receives notification that Lewis’ check is being returned for nonsufficient funds (NSF).

12/31/Yr 2Foxworth writes off Lewis’ account as uncollectible.

 

 

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