(Learning Objective 5: Apply GAAP to uncollectible receivables) At December 31,2018, before any year-end adjustments, the Accounts Receivable balance of HamptonCompany, Inc., is $330,000. The Allowance for Uncollectible Accounts has a $15,400 creditbalance. Hampton prepares the following aging schedule for Accounts Receivable:Age of AccountsTotal Balance 1–30 Days 31–60 Days 61–90 Days Over 90 Days$330,000 $100,000 $70,000 $30,000Estimated uncollectible 0.6% 3.0% 5.0%$130,00040.0%Requirements1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowanceaccount adequate? Too high? Too low?2. Make the entry required by the aging schedule. Prepare a T-account for the allowance.3. Show how Hampton will report Accounts Receivable on its December 31 balance sheet.
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
(Learning Objective 5: Apply GAAP to uncollectible receivables) At December 31,
2018, before any year-end adjustments, the
Company, Inc., is $330,000. The Allowance for Uncollectible Accounts has a $15,400 credit
balance. Hampton prepares the following aging schedule for Accounts Receivable:
Age of Accounts
Total Balance 1–30 Days 31–60 Days 61–90 Days Over 90 Days
$330,000 $100,000 $70,000 $30,000
Estimated uncollectible 0.6% 3.0% 5.0%
$130,000
40.0%
Requirements
1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowance
account adequate? Too high? Too low?
2. Make the entry required by the aging schedule. Prepare a T-account for the allowance.
3. Show how Hampton will report Accounts Receivable on its December 31
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