From inception of operations, Savvy Company carried no allowance for doubtful accounts. Uncollectible receivables were expensed as written off and recoveries were credited to income as collected. During the current year, management recognized that the accounting policy with respect to doubtful accounts was not correct, and determined that an allowance for doubtful accounts was necessary. A policy was established to maintain an allowance for doubtful accounts based on historical bad debt loss percentage applied to year-end accounts receivable. The historical bad debt loss percentage is to be recomputed each year based on all available past years up to a maximum of five years. Accounts Year Credit sales written off Recoveries 15,000 40,000 50,000 65,000 88,000 0. 1,500,000 2,200,000 3,000,000 3,300,000 4,000,000 2016 2,000 3,000 5,000 10,000. 2017 2018 2019 2020 Accounts receivable balances were P1,250,000 and P2,000,000 on January 1, 2020 and December 31, 2020, respectively. Required: 1. Prepare journal entry to set up the allowance for doubtful accounts on January 1, 2020. 2. Compute the doubtful accounts expense for the current year, 3. Determine the net realizable value of accounts receivable on December 31, 2020.

From inception of operations, Savvy Company carried no allowance for doubtful accounts. Uncollectible receivables were expensed as written off and recoveries were credited to income as collected. During the current year, management recognized that the accounting policy with respect to doubtful accounts was not correct, and determined that an allowance for doubtful accounts was necessary. A policy was established to maintain an allowance for doubtful accounts based on historical bad debt loss percentage applied to year-end accounts receivable. The historical bad debt loss percentage is to be recomputed each year based on all available past years up to a maximum of five years. Accounts Year Credit sales written off Recoveries 15,000 40,000 50,000 65,000 88,000 0. 1,500,000 2,200,000 3,000,000 3,300,000 4,000,000 2016 2,000 3,000 5,000 10,000. 2017 2018 2019 2020 Accounts receivable balances were P1,250,000 and P2,000,000 on January 1, 2020 and December 31, 2020, respectively. Required: 1. Prepare journal entry to set up the allowance for doubtful accounts on January 1, 2020. 2. Compute the doubtful accounts expense for the current year, 3. Determine the net realizable value of accounts receivable on December 31, 2020.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 5PA: The following accounts receivable information pertains to Luxury Cruises. A. Determine the estimated...

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The following accounts receivable information pertains to Select Distributors. A. Determine the estimated uncollectible bad debt for Select Distributors in 2018 using the balance sheet aging of receivables method. B. Record the year-end 2018 adjusting journal entry for bad debt. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $233,180; record the year-end entry for bad debt, taking this into consideration. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $199,440; record the year-end entry for bad debt, taking this into consideration. E. On March 21, 2019, Select Distributors identifies Aida Normans account as uncollectible in the amount of $10,890. Record the entry for identification.
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Using Corney Company's accounts receivable disclosures and the following information, answer the questions below. NOTE 1: Accounting Policies Accounts Receivable Accounts receivable consists principally of trade receivables, which are recorded at the invoiced amount, net of allowances for doubtful accounts and prompt payment discounts. Trade receivables do not bear interest. The allowance for doubtful accounts represents management's estimate of the amount of probable credit losses in existing accounts receivable, as determined from a review of past due balances and other specific account data. Account balances are written off against the allowance when management determines the receivable is uncollectible. For the years ended 2019 and 2018, the Company did not have off-balance sheet credit exposure related to its customers. NOTE 18 SUPPLEMENTAL FINANCIAL STATEMENT DATA Consolidated Balance Sheet (millions) 2019 2018 Trade receivables…
An aging of a company's accounts receivable indicates that estimate of the uncollectible accounts totals $4,145. If Allowance for Doubtful Accounts has a $1,241 credit balance, the adjustment to record the bad debt expense for the period will require a Select the correct answer. a-credit to Allowance for Doubtful for $4,145. b-debit to Bad Debt Expense for $2,904. c-debit to Allowance for Doubtful Accounts for $2,904. d-debit to Allowance for Doubtful Accounts for $4,145