In 2020, Maxton Company sold its services on credit in the amount of $988,400. Total cash collections during the year were $790,720. The company determined that $4,942 of accounts receivable would not be collected and wrote them off. At the end of 2020, management decided to increase its estimate of bad debt to 1% of credit sales compared to 0.5% from last year due to the amount of accounts receivable that proved to be uncollectible during the year. At the beginning of 2020, the company had $152,900 in accounts receivable and a credit balance of $4,600 in allowance for doubtful accounts. Assume the company has a year end of December 31. Do not enter dollar signs or commas in the ikput boxes. Round your answers to the nearest whole number. a) Prepare the necessary journal entries to record all 2020 transactions including sales on account, collection, the write-off and the new allowance amount. To simplify the transactions, all dates will be December 31. write-off and the new allowance amount. To simpmy uie waoucoon

In 2020, Maxton Company sold its services on credit in the amount of $988,400. Total cash collections during the year were $790,720. The company determined that $4,942 of accounts receivable would not be collected and wrote them off. At the end of 2020, management decided to increase its estimate of bad debt to 1% of credit sales compared to 0.5% from last year due to the amount of accounts receivable that proved to be uncollectible during the year. At the beginning of 2020, the company had $152,900 in accounts receivable and a credit balance of $4,600 in allowance for doubtful accounts. Assume the company has a year end of December 31. Do not enter dollar signs or commas in the ikput boxes. Round your answers to the nearest whole number. a) Prepare the necessary journal entries to record all 2020 transactions including sales on account, collection, the write-off and the new allowance amount. To simplify the transactions, all dates will be December 31. write-off and the new allowance amount. To simpmy uie waoucoon

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter16: Accounting For Accounts Receivable

Section: Chapter Questions

Problem 2CE: Tonis Tech Shop has total credit sales for the year of 170,000 and estimates that 3% of its credit...

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At the end of 20-3, Martel Co. had 410,000 in Accounts Receivable and a credit balance of 300 in Allowance for Doubtful Accounts. Martel has now been in business for three years and wants to base its estimate of uncollectible accounts on its own experience. Assume that Martel Co.s adjusting entry for uncollectible accounts on December 31, 20-2, was a debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts of 25,000. (a) Estimate Martels uncollectible accounts percentage based on its actual bad debt experience during the past two years. (b) Prepare the adjusting entry on December 31, 20-3, for Martel Co.s uncollectible accounts.
Aerospace Electronics reports $567,000 in credit sales for 2018 and $632,500 in 2019. They have a $499,000 accounts receivable balance at the end of 2018, and $600,000 at the end of 2019. Aerospace uses the income statement method to record bad debt estimation at 5% during 2018. To manage earnings more favorably, Aerospace changes bad debt estimation to the balance sheet method at 7% during 2019. A. Determine the bad debt estimation for 2018. B. Determine the bad debt estimation for 2019. C. Describe a benefit to Aerospace Electronics in 2019 as a result of its earnings management.
Marmol Corporation uses the allowance method for bad debts. During 2019, Marmol charged 50,000 to bad debt expense and wrote off 45,200 of uncollectible accounts receivable. These transactions resulted in a decrease in working capital of: a. 0 b. 4,800 c. 45,200 d. 50,000
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Fortune Accounting reports $1,455,000 in credit sales for 2018 and $1,678,430 in 2019. It has an $825,000 accounts receivable balance at the end of 2018 and $756,000 at the end of 2019. Fortune uses the balance sheet method to record bad debt estimation at 7.5% during 2018. To manage earnings more favorably, Fortune changes bad debt estimation to the income statement method at 5.5% during 2019. A. Determine the bad debt estimation for 2018. B. Determine the bad debt estimation for 2019. C. Describe a benefit to Fortune in 2019 as a result of its earnings management.
Jars Plus recorded $861,430 in credit sales for the year and $488,000 in accounts receivable. The uncollectible percentage is 2.3% for the income statement method, and 3.6% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $10,220, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $5,470, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
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Tonis Tech Shop has total credit sales for the year of 170,000 and estimates that 3% of its credit sales will be uncollectible. Allowance for Doubtful Accounts has a credit balance of 275. Prepare the adjusting entry at year-end for the estimated bad debt expense. (a) Based on an aging of its accounts receivable, Kyles Cyclery estimates that 3,200 of its year-end accounts receivable will be uncollectible. Allowance for Doubtful Accounts has a debit balance of 280 at year-end. Prepare the adjusting entry at year-end for the estimated uncollectible accounts.
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