Problem 6-8 (AICPA Adapted) From inception of operations, Paramount Company provided for uncollectible accounts receivable under the allowance method using the percentage of sales method. The balance in the allowance for doubtful accounts was P500,000 on January 1, 2019. During the current year, credit sales totaled P20,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, P300,000 of bad debts were written off, and recoveries of accounts previously written off amounted to P50,000. The aging of accounts receivable showed the following summary: Classification Balance Collectible November to December July to October January to June Prior to January 1, 2019 5,000,000 2,000,000 1,000,000 500,000 95% 90% 75% 25% Based on the review of collectibility of the account balances in "prior to January 1, 2019" aging category, additional accounts totaling P100,000 are to be written off on December 31, 2019. Effective with the year ended December 31, 2019, the entity adopted a new accounting method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging of accounts receivable. Required: 1. Determine the allowance for doubtful accounts before adjustment.

Problem 6-8 (AICPA Adapted) From inception of operations, Paramount Company provided for uncollectible accounts receivable under the allowance method using the percentage of sales method. The balance in the allowance for doubtful accounts was P500,000 on January 1, 2019. During the current year, credit sales totaled P20,000,000, interim provisions for doubtful accounts were made at 2% of credit sales, P300,000 of bad debts were written off, and recoveries of accounts previously written off amounted to P50,000. The aging of accounts receivable showed the following summary: Classification Balance Collectible November to December July to October January to June Prior to January 1, 2019 5,000,000 2,000,000 1,000,000 500,000 95% 90% 75% 25% Based on the review of collectibility of the account balances in "prior to January 1, 2019" aging category, additional accounts totaling P100,000 are to be written off on December 31, 2019. Effective with the year ended December 31, 2019, the entity adopted a new accounting method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging of accounts receivable. Required: 1. Determine the allowance for doubtful accounts before adjustment.

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 15P: Comprehensive Receivables Problem Blackmon Corporations December 31, 2018, balance sheet disclosed...

See similar textbooks

Similar questions

Comprehensive Receivables Problem Blackmon Corporations December 31, 2018, balance sheet disclosed the following information relating to its receivables: The company has a recourse liability of 700 related to a note receivable sold to a bank. During 2019, credit sales (terms, n/EOM) totaled 2,200,000, and collections on accounts receivable (unassigned) amounted to 1,900,000. Uncollectible accounts totaling 18,000 from several customers were written off, and a 1,350 accounts receivable previously written off was collected. Additionally, the following transactions relating to Blackmons receivables occurred during the year: On December 31, 2019, an aging of the accounts receivable balance indicated the following: Required: 1. Prepare the journal entries to record the preceding receivable transactions during 2019 and the necessary adjusting entry on December 31, 2019. Assume a 360-day year for interest calculations and round calculations to the nearest dollar. 2. Prepare the receivables portion of Blackmons December 31, 2019, balance sheet. 3. Next Level Compute Blackmons accounts receivable turnover in days, assuming a 360-day business year. What is your evaluation of its collection policies? 4. If Blackmon uses IFRS, what might be the heading of the section for the receivables reported in Requirement 2?
Funnel Direct recorded $1,345,780 in credit sales for the year and $695,455 in accounts receivable. The uncollectible percentage is 4.4% for the income statement method and 4% 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 credit balance in Allowance for Doubtful Accounts of $13,888; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
UNCOLLECTIBLE ACCOUNTSPERCENTAGE OF SALES AND PERCENTAGE OF RECEIVABLES At the completion of the current fiscal year ending December 31, the balance of Accounts Receivable for Andersons Greeting Cards was 180,000. Credit sales for the year were 1,950,000. REQUIRED Make the necessary adjusting entry in general journal form under each of the following assumptions. Show calculations for the amount of each adjustment and the resulting net realizable value. 1. Allowance for Doubtful Accounts has a credit balance of 2,600. (a) The percentage of sales method is used and bad debt expense is estimated to be 1.5% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 30,250 in uncollectible accounts. 2. Allowance for Doubtful Accounts has a debit balance of 1,900. (a) The percentage of sales method is used and bad debt expense is estimated to be 1.0% of credit sales. (b) The percentage of receivables method is used and an analysis of the accounts produces an estimate of 20,500 in uncollectible accounts.
Estimating Bad Debts from Receivables Balances The following information is extracted from Shelton Corporations accounting records at the beginning of 2019: During 2019, sales on credit amounted to 575,000, 557,400 was collected on outstanding receivables and 2,600 of receivables were written off as uncollectible. On December 31, 2019, Shell on estimastes its bad debts to be 4% of the outstanding gross accounts receivable balance. Required: 1. Prepare the journal entry necessary to record Sheltons estimate of bad debt expense for 2019. 2. Prepare the Accounts Receivable section of Shelton's December 31, 2019, balance sheet. 3. Compute Shelton's receivables turnover. (Round to one decimal place.) 4. It Sheldon uses IFRS, what might be the heading for the accounts receivable section in Requirement 2?