The company uses the Aging of Accounts Receivable method to estimate bad debts. The company has the following information of Accounts Receivable as at 31 April 2021. Number of Days Past-due 1 - 30 31 - 60 61-90 Accounts Receivable $65,000 $32,000 $9,000 Estimated Uncollectible % 3% 5% 9% Before the adjustment is recorded, the Allowance for Doubtful Accounts has a $1,660 credit balance. The selected information from the accounting records on 1 April 2021 is as follows. The company uses the perpetual inventory system and the LIFO method for its inventory, reporting the beginning inventory as follows: 400 units at a per-unit cost of $30 (purchased on 20 Mar. 2021) 600 units at a per-unit cost of $34 (purchased on 28 Mar. 2021) The following transactions occurred in April 2021. 6 Apr. Sold 700 units of inventory at a per-unit selling price of $75 with terms 5/15, n/60. 8 Apr. Wrote off a $2,600 customer’s account balance, using the allowance method. 12 Apr. Purchased an additional 800 units of inventory from a supplier on account at a per-unit cost of $38, with terms 6/10, n/45. 14 Apr. Collected a payment from the credit sales recorded on 6 April. 17 Apr. Return 200 units of inventory purchased on 12 April. 20 Apr. Sold 700 units of inventory at a per-unit selling price of $82 by cash. 24 Apr. Made a payment for the credit purchase on 12 April. Instruction : Prepare journal entries to record the transactions in April 2021 ,estimated bad debts on 30 Apr 21, and calculate the amount of Net Accounts Receivable as at 30 April 2021
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.
The company uses the Aging of
|
|
Number of Days Past-due |
|||
|
1 - 30 |
31 - 60 |
61-90 |
||
|
Accounts Receivable |
$65,000 |
$32,000 |
$9,000 |
|
|
Estimated Uncollectible % |
3% |
5% |
9% |
- Before the adjustment is recorded, the Allowance for Doubtful Accounts has a $1,660 credit balance.
The selected information from the accounting records on 1 April 2021 is as follows.
- The company uses the perpetual inventory system and the LIFO method for its inventory, reporting the beginning inventory as follows:
400 units at a per-unit cost of $30 (purchased on 20 Mar. 2021)
600 units at a per-unit cost of $34 (purchased on 28 Mar. 2021)
The following transactions occurred in April 2021.
|
6 Apr. |
Sold 700 units of inventory at a per-unit selling price of $75 with terms 5/15, n/60. |
|
8 Apr. |
Wrote off a $2,600 customer’s account balance, using the allowance method. |
|
12 Apr. |
Purchased an additional 800 units of inventory from a supplier on account at a per-unit cost of $38, with terms 6/10, n/45. |
|
14 Apr. |
Collected a payment from the credit sales recorded on 6 April. |
|
17 Apr. |
Return 200 units of inventory purchased on 12 April. |
|
20 Apr. |
Sold 700 units of inventory at a per-unit selling price of $82 by cash. |
|
24 Apr. |
Made a payment for the credit purchase on 12 April. |
Instruction : Prepare
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