Maxwell Inc. analyzed its accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible: % Considered Age Group Balance Uncollectible 0-30 days past due $100,000 1% 31-60 days past due 18,000 3% 61-120 days past due 20,000 6% 121-180 days past due 7,000 10% Over 180 days past due 2,000 20% $147,000 The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $840 on December 31, before any adjustments. a. Determine the amount of the adjustment for estimated credit losses on December 31. $Answer b. Determine the financial statement effect of a write off of Porter Company’s account on the following May 12, in the amount of $480. Use negative signs with answers, when appropriate. If a transaction increases and decreases the same Balance Sheet category, enter the increase amount in the first row and the decrease amount directly below (in the second row). Balance Sheet Income Statement Stockholders' Assets = Liabilities + Equity Revenues - Expenses = Net Income
Maxwell Inc. analyzed its accounts receivable balances at December 31, and arrived at the aged balances listed below, along with the percentage that is estimated to be uncollectible: % Considered Age Group Balance Uncollectible 0-30 days past due $100,000 1% 31-60 days past due 18,000 3% 61-120 days past due 20,000 6% 121-180 days past due 7,000 10% Over 180 days past due 2,000 20% $147,000 The company handles credit losses using the allowance method. The credit balance of the Allowance for Doubtful Accounts is $840 on December 31, before any adjustments. a. Determine the amount of the adjustment for estimated credit losses on December 31. $Answer b. Determine the financial statement effect of a write off of Porter Company’s account on the following May 12, in the amount of $480. Use negative signs with answers, when appropriate. If a transaction increases and decreases the same Balance Sheet category, enter the increase amount in the first row and the decrease amount directly below (in the second row). Balance Sheet Income Statement Stockholders' Assets = Liabilities + Equity Revenues - Expenses = Net Income
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter6: Cash And Receivables
Section: Chapter Questions
Problem 12E: Inferring Accounts Receivable Amounts At the end of 2019, Karras Inc. had a debit balance of 141,120...
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Question
Maxwell Inc. analyzed its
| % Considered | ||
|---|---|---|
| Age Group | Balance | Uncollectible |
| 0-30 days past due | $100,000 | 1% |
| 31-60 days past due | 18,000 | 3% |
| 61-120 days past due | 20,000 | 6% |
| 121-180 days past due | 7,000 | 10% |
| Over 180 days past due | 2,000 | 20% |
| $147,000 |
The company handles credit losses using the allowance method.
The credit balance of the Allowance for Doubtful Accounts is $840 on December 31, before any adjustments.
a. Determine the amount of the adjustment for estimated credit losses on December 31.
$Answer
b. Determine the financial statement effect of a write off of Porter Company’s account on the following May 12, in the amount of $480.
Use negative signs with answers, when appropriate.
If a transaction increases and decreases the same
| Balance Sheet | Income Statement | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Stockholders' | ||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | - | Expenses | = | Net Income | |||
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