My New Business uses aging of receivables to determine the value for allowance for doubtful accounts. Below are the balances and due dates for each account. Determine the number of days past due for each of these accounts. Complete the aging of receivables schedule. Determine the allowance for doubtful accounts and write the journal entry. Would this entry change if there was a debit balance of $1500? Credit balance of $1500? Customer Due Date Balance ABC 1/4/18 $10,000 Buy Rite 2/8/18 $7500 Calming Solutions 3/13/18 $2200 Dry Fast 4/23
Bad Debts
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.
My New Business uses aging of receivables to determine the value for allowance for doubtful accounts. Below are the balances and due dates for each account. Determine the number of days past due for each of these accounts. Complete the aging of receivables schedule. Determine the allowance for doubtful accounts and write the
|
Customer |
Due Date |
Balance |
|
ABC |
1/4/18 |
$10,000 |
|
Buy Rite |
2/8/18 |
$7500 |
|
Calming Solutions |
3/13/18 |
$2200 |
|
Dry Fast |
4/23/18 |
$3456 |
|
Easy Peasie |
5/3/19 |
$683 |
|
Fast Service |
6/1/18 |
$5682 |
|
Going Out |
7/9/18 |
$1200 |
|
Hurry Up |
8/25/18 |
$3800 |
|
Igloos R Us |
9/22/18 |
$570 |
|
Jumpin Jack Flash |
10/10/18 |
$250 |
|
King Kong Kopies |
11/14/18 |
$6893 |
|
Lite It Up |
12/1/18 |
$476 |
|
Magnificent Marketing |
1/15/19 |
$1500 |
Aging Categories
|
Age Class |
Percent Uncollectible |
|
Not past due |
1% |
|
1- 30 days |
4% |
|
31- 60 days |
16% |
|
61- 90 days |
25% |
|
91- 120 days |
40% |
|
Over 120 days |
80% |
- Record the following stock transactions
|
|
$50,000 |
|
Common shares, 20,000 issued |
200,000 |
|
|
750,000 |
|
Total shareholders’ equity |
$1,000,000 |
Jan 31 Issued 4,000 common shares for $13 each.
May 14 Issued 150 preferred shares in exchange for equipment with a fair value of $90,000.
July 1 Declared the regular cash dividend on preferred shares.
July 15 Paid the regular cash dividend on preferred shares.
August 7 Declared and issued a 25% stock dividend on common shares at a time when the market price was $14 per share.
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