Exercise 12.1 A firm commenced business on I January 2010 selling for cash and on credit. In the course of operations in 2012 and 2013 it was found necessary to write off debts as shown below: Date customer Amount written off 31 March 2012 Sena Abossey GH¢3,500 30 June 2012 Agnes Ayum GHe4,600 30 September 2012 Kofi Anaba GH¢3,800 30 April 2013 Jojo Amadi GHE1,s00 GHe 500 31 July 2013 31 October 2013 Serwaa Akoto Yaa Agoe GH¢ 300 On 31 December, 2012 and 2013 the balances on the Accounts receivable were GHe 255,000 and GHe320,000 respectively. The firm's policy was to make a provision for doubtful debts of 15% on the accounts receivable balance as at 31 December each year. You are required to prepare: i. The bad debts account for the two years ii. The provision for doubtful debts accounts for the two years and show thefinancial position extracts for the two years.

Exercise 12.1 A firm commenced business on I January 2010 selling for cash and on credit. In the course of operations in 2012 and 2013 it was found necessary to write off debts as shown below: Date customer Amount written off 31 March 2012 Sena Abossey GH¢3,500 30 June 2012 Agnes Ayum GHe4,600 30 September 2012 Kofi Anaba GH¢3,800 30 April 2013 Jojo Amadi GHE1,s00 GHe 500 31 July 2013 31 October 2013 Serwaa Akoto Yaa Agoe GH¢ 300 On 31 December, 2012 and 2013 the balances on the Accounts receivable were GHe 255,000 and GHe320,000 respectively. The firm's policy was to make a provision for doubtful debts of 15% on the accounts receivable balance as at 31 December each year. You are required to prepare: i. The bad debts account for the two years ii. The provision for doubtful debts accounts for the two years and show thefinancial position extracts for the two years.

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter7: Receivables And Investments

Section: Chapter Questions

Problem 7.1DC: Reading 3M Companys Balance Sheet: Accounts Receivable The following current asset appears on the...

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Allowance Method for Accounting for Bad Debts At the beginning of 2016, EZ Tech Companys Accounts Receivable balance was $140,000, and the balance in Allowance for Doubtful Accounts was $2,350 (Cr.). EZ Techs sales in 2016 were $1,050,000, 80% of which were on credit. Collections on account during the year were $670,000. The company wrote off $4,000 of uncollectible accounts during the year. Required Prepare summary journal entries related to the sale, collections, and write-offs of accounts receivable during 2016. Prepare journal entries to recognize bad debts assuming that (a) bad debts expense is 3% of credit sales and (b) amounts expected to be uncollectible are 6% of the year-end accounts receivable. What is the net realizable value of accounts receivable on December 31, 2016, under each assumption in part (2)? What effect does the recognition of bad debts expense have on the net realizable value? What effect does the write-off of accounts have on the net realizable value?
Millennium Associates records bad debt using the allowance, income statement method. They recorded $299,420 in accounts receivable for the year, and $773,270 in credit sales. The uncollectible percentage is 3.2%. On February 5, Millennium Associates identifies one uncollectible account from Molar Corp in the amount of $1,330. On April 15, Molar Corp unexpectedly pays its account in full. Record journal entries for the following. A. Year-end adjusting entry for 2017 bad debt B. February 5, 2018 identification entry C. Entry for payment on April 15, 2018
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Michelle Company reports $345,000 in credit sales and $267,500 in accounts receivable at the end of 2019. Michelle currently uses the income statement method to record bad debt estimation at 4%. To manage earnings more efficiently, Michelle changes bed debt estimation to the balance sheet method at 4%. How much is the difference in net income between the income statement and balance sheet methods? A. $3,100 B. $13,800 C. $10,700 D. $77,500
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