FINANCIAL ACCOUNTING W/ACCESS >CI<
2nd Edition
ISBN: 9781259999024
Author: SPICELAND
Publisher: MCG CUSTOM
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Textbook Question
Chapter 5, Problem 5.19E
Compare the percentage of receivables method and the percentage-of-credit-sales method (LO5–9)
Suzuki Supply reports the following amounts at the end of 2018 (before adjustment).
Credit Sales for 2018 | $260,000 |
Accounts Receivable. December 31,2018 | 55,000 |
Allowance for Uncollectible Accounts. December 31,2018 | 1,100 (credit) |
Required:
1. Record the adjustment for uncollectible accounts using the percentage-of-receivables method. Suzuki estimates 12% of receivables will not be collected.
2. Record the adjustment for uncollectible accounts using the percentage-of-credit-sales method. Suzuki estimates 3% of credit sales will not be collected.
3. Calculate the effect on net income (before taxes) and total assets in 2018 for each method.
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Suzuki Supply reports the following amounts at the end of 2021 (before adjustment).Credit Sales for 2021 $260,000 Accounts Receivable, December 31, 2021 55,000 Allowance for Uncollectible Accounts, December 31, 2021 1,100 (credit )Required: 1. Record the adjustment for uncollectible accounts using the percentage-of-receivables method. Suzuki estimates 12% of receivables will not be collected. 2. Record the adjustment for uncollectible accounts using the percentage-of-credit-sales method. Suzuki estimates 3% of credit sales will not be collected. 3. Calculate the effect on net income (before taxes) and total assets in 2021 for each method.
Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expenseis established as a percentage of credit sales. For 2018, net credit sales totaled $4,500,000, and the estimated baddebt percentage is 1.5%. The allowance for uncollectible accounts had a credit balance of $42,000 at the beginningof 2018 and $40,000, after adjusting entries, at the end of 2018.Required:1. What is bad debt expense for 2018 as a percent of net credit sales?2. Assume Johnson makes no other adjustment of bad debt expense during 2018. Determine the amount ofaccounts receivable written off during 2018.3. If the company uses the direct write-off method, what would bad debt expense be for 2018?
Jackson Company had the following information in 2018:Accounts receivable 12/31/18...................................................................Allowance for uncollectible-accounts credit balance12/31/18 (before adjustment) ...................................................................Credit service revenue during 2018 ..........................................................Cash service revenue during 2018 ............................................................Collections from customers on account during 2018................................$ 8,00090039,00020,00040,0008. Uncollectible accounts are determined by the percent-of-sales method to be 3% of creditsales. How much is uncollectible-account expense for 2018?a. $1,010b. $900c. $320d. $1,170
Chapter 5 Solutions
FINANCIAL ACCOUNTING W/ACCESS >CI<
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