Concept explainers
Impairment of
• LO13–5, LO13–6
The Manda Panda Company uses the allowance method to account for
Required:
1. Does this situation describe a loss contingency? Explain.
2. What is the bad debt expense that Manda Panda should report in its 2018 income statement?
3. Prepare the appropriate
4. What is the net accounts receivable value Manda Panda should report in its 2018
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INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
- ObLO 8-2 10-8-2 A-BOL E8-3 Recording, Reporting, and Evaluating a Bad Debt Estimate Using the Percentage of Credit Sales Method nga 105 During the year ended December 31, 2021, Kelly's Camera Shop had sales revenue of $170,000, of which $85,000 was on credit. At the start of 2021, Accounts Receivable showed a $10,000 debit balance and the Allowance for Doubtful Accounts showed a $600 credit balance. Collections of accounts receivable during 2021 amounted to $68,000. Data during 2021 follow: a. b. On December 10, a customer balance of $1,500 from a prior year was determined to be uncol- lectible, so it was written off. DesthomA betelumu.A 1. 2. On December 31, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year. Required: Give the required journal entries for the two events in December. inomials Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the balance sheet…arrow_forwardes Exercise 7-12 (Algo) Uncollectible accounts; allowance method vs. direct write-off method [LO7-5, 7-6] Johnson Company calculates its allowance for uncollectible accounts as 10% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of $22,000 at the beginning of 2024. No previously written-off accounts receivable were reinstated during 2024. At 12/31/2024, gross accounts receivable totaled $366,700, and prior to recording the adjusting entry to recognize bad debts expense for 2024, the allowance for uncollectible accounts had a debit balance of 40,300. Required: 1. What was the balance in gross accounts receivable as of 12/31/2023? 2. What journal entry should Johnson record to recognize bad debt expense for 2024? 3. Assume Johnson made no other adjustment of the allowance for uncollectible accounts during 2024. Determine the amount of accounts receivable written off during 2024. 4. If Johnson instead used the direct…arrow_forwardProblem 6-4: The Northrock Corporation The Northrock Corporation produced the following summary of its historical experience of write offs of Accounts Receivable (A/R) on October 31, 2021: Year A/R at Year end Uncollectible and written off in subsequent years 2018 14000 700 2019 10000 1000 2020 12000 600 2021 4000 200 Required 1. Calculate the percentage loss on Accounts Receivable for the period 2018 to 2021 by calculating total write offs over the period as a % of total A/R. Round your calculation to two decimal places. 2. Compute the balance for the Allowance for Doubtful accounts (rounded to the nearest $) on October 31, 2021 if Accounts Receivable on that date were 16000. Apply the % ending A/R method using the percentage calculated in part 1. 3. Scenario A: On October 31, 2021 the unadjusted Allowance for Doubtful Accounts was 160 credit. Prepare an adjusting entry to obtain the amount that you calculated in part 2. 4. Scenario B: On October 31, 2021 the unadjusted Allowance for…arrow_forward
- ! Required information Problem 7-2A (Algo) Estimating and reporting bad debts LO P2, P3 [The following information applies to the questions displayed below.] At December 31, Hawke Company reports the following results for its calendar year. Cash sales Credit sales In addition, its unadjusted trial balance includes the following items. Accounts receivable Allowance for doubtful accounts Problem 7-2A (Algo) Part 1 $ 50,000 $ 125,000 Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption. View transaction listarrow_forwardExercise 7-4 (Algo) Direct write-off method LO P1 Dexter Company uses the direct write-off method. March 11 Dexter determines that it cannot collect $10,000 of its accounts receivable from Leer Company. March 29 Leer Company unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above transactions.arrow_forwardQuestion 9 Concord Company provides for bad debt expense at the rate of 3% of accounts receivable. The following data are available for 2018: Allowance for doubtful accounts, 1/1/18 (Cr.) $ 11300 Accounts written off as uncollectible during 2018 10400 Ending accounts receivable 1204000 The Allowance for Doubtful Accounts balance at December 31, 2018, should be $37020. $900. $36120. $35220.arrow_forward
- Estimating and reporting bad debts LO P2, P3 [The following information applies to the questions displayed below.] At December 31, 2017, Hawke Company reports the following results for its calendar year. Cash sales Credit sales $1,738,920 2,812,000 In addition, its unadjusted trial balance includes the following items. $852,036 debit 10,250 debit Accounts receivable Allowance for doubtful accountS Problem 9-2A Part 2 2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part la. Current assets:arrow_forwardProblem 7-8 (Algo) Factoring of accounts receivable; without recourse [LO7-8] Samson Wholesale Beverage Company regularly factors its accounts receivable with the Milpitas Finance Company. On April 30, 2021, the company transferred $890,000 of accounts receivable to Milpitas. The transfer was made without recourse. Milpitas remits 90% of the factored amount and retains 10%. When Milpitas collects the receivables, it remits to Samson the retained amount less a 4% fee (4% of the total factored amount). Samson estimates the fair value of the last 10% of its receivables to be $69,000. Required: Prepare the journal entry for Samson Wholesale Beverage for the transfer of accounts receivable on April 30, assuming the sale criteria are met. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) O Answer is not complete. No Event General Journal Debit Credit 1 Cash 801,000 Loss on sale of receivables 59,720 X Receivable from factor…arrow_forwardP 7-4 Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2020 balance sheet disclosed the following: Uncollectible accounts • LO7-5, LO7-6 Current assets: $432,000 Receivables, net of allowance for uncollectible accounts of $30,000 During 2021, credit sales were $1,750,000, cash collections from customers $1,830,000, and $35,000 in accounts receivable were written off. In addition, $3,000 was collected from a customer whose account was writ- ten off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following: Percentage of Year-End Receivables in Group Percent Age Group Uncollectible 0-60 days 65% 4% 61-90 days 91-120 days Over 120 days 15 10 25 40 Required: 1. Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previ- ously written off. 2. Prepare the year-end adjusting entry…arrow_forward
- ! Required information Problem 7-2A (Static) Estimating and reporting bad debts LO P2, P3 [The following information applies to the questions displayed below.] At December 31, Hawke Company reports the following results for its calendar year. Cash sales Credit sales $ 1,905,000 $ 5,682,000 In addition, its unadjusted trial balance includes the following items. Accounts receivable Allowance for doubtful accounts Problem 7-2A (Static) Part 1 $ 1,270,100 debit $ 16,580 debit Required: 1. Prepare the adjusting entry to record bad debts under each separate assumption. a. Bad debts are estimated to be 1.5% of credit sales. b. Bad debts are estimated to be 1% of total sales. c. An aging analysis estimates that 5% of year-end accounts receivable are uncollectible. Adjusting entries (all dated December 31).arrow_forwardExercise 7-11 (Algo) Uncollectible accounts; allowance method vs. direct write-off method (L07-5, 7-6] Johnson Company calculates its allowance for uncollectible accounts as 10% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of $12.000 at the beginning of 2021. No previously written-off accounts receivable were reinstated during 2021. At 12/31/2021, gross accounts receivable totaled $200,100, and prior to recording the adjusting entry to recognize bad debts expense for 2021, the allowance for uncollectible accounts had a debit balance of 22,000. Required: 1. What was the balance in gross accounts receivable as of 12/31/2020? 2. What journal entry should Johnson record to recognize bad debt expense for 2021? 3. Assume Johnson made no other adjustment of the allowance for uncollectible accounts during 2021. Determine the amount of accounts receivable written off during 2021. 4. If Johnson instead used the direct write-off…arrow_forwardRequired information Problem 7-2A (Algo) Estimating and reporting bad debts LO P2, P3 [The following information applies to the questions displayed below) At December 31, Hawke Company reports the following results for its calendar year. Cash sales Credit sales $ 400,000 $1,000,000 In addition, its unadjusted trial balance includes the following items Accounts receivable Allowance for doubtful accounts $ 900,000 debit $ 7,200 debit Problem 7-2A (Algo) Part 3 3. An aging analysis estimates that 4% of year-end accounts receivable are uncollectible. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31 balance sheet. Cument assets Accounts receivable Less: Allowance for doubtful accounts 이arrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning