Age of Customer Debt Amounts owed Estimate of % that (including GST) will not be collected. 1-30 days overdue 14,107.50 5% 31 180 days overdue 6,204.00 16 % 181 - 365 days overdue 2,458.50 25 % 1 year + overdue 517.00 100 % 23,287.00 Perfect Cover Insurance Brokers sales data for the past year is Credit Sales and Commissions $42,900 $11,600 $ 2,400 (returns are only available on credit sales) Cash Sales and Commissions Sales Returns Industry data shows that 5% of credit transactions are likely to go bad. Rita has also informed you that the current balance in her allowance for doubtful debts account is 500 Dr after a recent bad debt write off. a) Record Journal entry to adjust the allowance for doubtful debts account using the net sales method. b) State the balance of the allowance for doubtful debts accounts after the adjustment in part A is completed. ABC

Age of Customer Debt Amounts owed Estimate of % that (including GST) will not be collected. 1-30 days overdue 14,107.50 5% 31 180 days overdue 6,204.00 16 % 181 - 365 days overdue 2,458.50 25 % 1 year + overdue 517.00 100 % 23,287.00 Perfect Cover Insurance Brokers sales data for the past year is Credit Sales and Commissions $42,900 $11,600 $ 2,400 (returns are only available on credit sales) Cash Sales and Commissions Sales Returns Industry data shows that 5% of credit transactions are likely to go bad. Rita has also informed you that the current balance in her allowance for doubtful debts account is 500 Dr after a recent bad debt write off. a) Record Journal entry to adjust the allowance for doubtful debts account using the net sales method. b) State the balance of the allowance for doubtful debts accounts after the adjustment in part A is completed. ABC

Name: As part of the review of her business Rita has been looking into what
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Description: As part of the review of her business Rita has been looking into what she is owed byvarious customers and how many debts are outstanding. Rita has been able to gatherthe following information about her customers and credit sales. Rita has reached ou

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 6TP: When a customer is delinquent on paying a notes receivable, your company has the option to continue...

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Anis supplies stationery to her customers on credit. Based on previous years’ trends, 2% of her accounts receivable will turn bad. To be prudent, she wants to record this potential loss in her books. Which of the following is the correct journal entry to record this estimate? Select one: a. Debit- Allowance for doubtful debtsCredit- Accounts receivable b. Debit- Allowance for doubtful debtsCredit- Statement of Profit or Loss and Other Comprehensive Income c. Debit- Statement of Profit or Loss and Other Comprehensive IncomeCredit- Allowance for doubtful debts d. Debit- Bad debt expenseCredit- Accounts receivable
You joined Henderson Technology Limited as accounting manager recently. In a management meeting, William Buckle, the managing director, expressed his concern on an amount due from Hunters Limited, which is long overdue and is unlikely to be recoverable. In a review of the aged debtors report, you found that over 40% of the debtors have overdue accounts. You also noted that there is no control system in place. You believe a better credit control system would help. You are required to prepare notes for your meeting with William, to outline the objective of having a control system in place, and the key points of a credit control system that would help to reduce overdue accounts.
Aron Larson is a customer of Bank Enterprises. Mr. Larson took out a loan in the amount of $120,000 on August 1. On December 31, Bank Enterprises uses the allowance method and determines the loan to be uncollectible. Larson had not paid anything toward the balance due on account. Record the journal entry recording the bad debt write-off?
When a customer is delinquent on paying a notes receivable, your company has the option to continue to attempt collection or sell the debt to a collection agency. Research the benefits and challenges with each of these options and in a short essay, answer the following questions. A. What are the benefits and challenges of continuing to attempt collection yourself? B. What are the benefits and challenges of selling debt to a collection agency? C. If you had a dishonored notes receivable, which option would you select and why? D. Would you weight certain benefits or challenges differently when making your selection? How?
Which one of the following statements concerning bad debt expenses is correct? Select one: a. When you write off an accounts receivable, you debit bad debt expense and credit accounts receivable. b. You record bad debt expense when individual accounts receivable becomes uncollectible. c. Under the percentage of receivables method, bad debt expense is the year-end receivables multiplied by the % of uncollectible accounts. d. When the allowance method is used, bad debt expense is recorded before the accounts are written off.
When a customer is delinquent on paying a notes receivable, your company has the option to continue to attempt collection or sell the debt to a collection agency. Research the benefits and challenges with each of these options and in a short essay, answer the following questions. Required part B What are the benefits and challenges of continuing to attempt collection yourself? What are the benefits and challenges of selling debt to a collection agency? If you had a dishonored notes receivable, which option would you select and why? Would you weight certain benefits or challenges differently when making your selection? How?
As the accountant for Clean Air Controls, you attend a meeting with the sales managers to discuss credit policies. At the meeting, you report that bad debts expense for the year is estimated to be $85,000 and account receivables at year end is $1,500,000 less a $57,000 allowance for doubtful accounts. Arthur Levitt, a sales manager, asks why bad debts expense and the allowance are not the same amount. Required 1. Write a professional email explaining this concept to Arthur. The company estimates bad debts expense as 3% of sales.
Provide the following independent journal entries: a. July 31, 2019. We had $1,000,000 of credit sales in July. We estimate that our bad debt expense will be 1% of credit sales. b. Aug. 15, 2019. We have an account receivable from Frank Farmworker for $500. On Aug. 15 we decide that we will not collect this account, so need to write it off. On Sept. 5 we get a check from Frank in the mail. c. Dec. 31, 2019. Allowance for Bad Debts currently has a credit balance of $7,200. We perform an aging of accounts receivable, and determine that the Allowance should have a balance of $10,100. d. Dec. 31, 2020. We age our accounts receivable: Age of accounts . Days: 1-30 31-60 61-9091+Total Accounts receivable$85,000$40,000$10,000$2,000$137,000 Estimate % uncollectible 1% 5% 20% 60% What balance should the…
Good day, please may you help me with accounting debtors journal and allowances on Nerina traders a gift shop situated in Illovo. debtors journal headings day,details,debtors controloutput vat,sales debtors allowances headings day,debtors control,input vat ,sales return
The following information was taken from the books of Big Boy Traders. Most of the sales take place on credit. Debtors are given credit terms of 30 days. The business does not expect to award any settlement discounts. All settlement discounts are therefore incidental in nature. Additional information:1. The incomplete Debtors Control account for the month of March 2019 hasbeen provided to you below.2. You have also been provided with a Debtors list. This list reflects all amountsowing by the debtors at 31 March 2019.3. The following errors/omissions were noted:>The total of the Debtors Journal was over‐cast by R 150.> A return of goods by D. Dagwood for R 870 including VAT was correctlyrecorded in the journal but posted to the account of E. Egghead.> An invoice issued to D. Dagwood for R 4 200 has been posted to thewrong side of his personal account.> No entry has been made for a cheque for R 1 500 which was returnedby the bank due to insufficient funds. The cheque was…
When would you consider a customer debt an uncollectible receivable? A. The debt is older than one year. B. You've been unable to contact them to collect. C. The debt is associated with a non-inventory item. D. You need to match income with expenses.
A friend owns a business that extends credit to its customers. The friend has asked you to helps with estimating uncollectible accounts and wants you to make a recommendation. Specifically, your friend is asking: Which of the two methods of estimating uncollectible provides for the most accurate estimate of the current net realizable value of the receivables?