(1)
Accounts receivable:
Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business.
Bad debt expense is an expense account. The amounts of loss incurred from extending credit to the customers are recorded as bad debt expense. In other words, the estimated uncollectible accounts receivable are known as bad debt expense.
To compute: The amount of accounts receivable due from customers at the end of 2015 and 2014.
(2)
To compute: The amount of Accounts Receivable Written-off during 2015.
(3)
To compute: The amount of Gross Sales.
(4)
The amount of cash collected from customers during the year, assuming that all sales are made on a credit basis.
Trending nowThis is a popular solution!
Chapter 7 Solutions
INTERMEDIATE ACCOUNTING(LL)-W/2 ACCESS
- Problem 20-3 (PHILCPA Adapted) entity provided the following data: Recoveries Credit sales Writeoffs 260,000 295,000 300,000 310,000 22,000 37,000 36,000 40,000 2013 2014 11,100,000 12,250,000 14,650,000 15,000,000 2015 2016 The collections from customers during 2016 totaled P14,000,000 excluding recoveries. Doubtful accounts are provided for as a percentage of credit sales The entity calculated the percentage annually by using the experience of the three years prior to the current year. 1. What amount should be reported as doubtful accounts expense for 2016? a. 310,000 b. 300,000 c. 222,000 d. 378,000 2. What amount should be reported as allowance for doubtful accounts on December 31, 2016? a. 110,000 b. 378,000 c. 300,000 d. 478,000 3. What is the net realizable value of accounts receivable on December 31, 2016? (a. 2,650,000 b. 2,690,000 c. 2,760,000 d. 2,800,000 P2,070,000 and for The On 1, receivablearrow_forwardE10-1 Determining Financial Statement Effects of Transactions Involving Notes Payable [LO10-2] Many businesses borrow money during periods of increased business activity to finance inventory and accounts receivable. Hudson's Bay Company (HBC) is Canada's largest department store. Each Christmas, HBC builds up its inventory to meet the needs of Christmas shoppers. A large portion of Christmas sales are on credit. As a result, HBC often collects cash from the sales several months after Christmas. Assume that on November 1, 2020, HBC borrowed $6 million cash from Downtown Bank and signed a promissory note that matures in six months. The interest rate was 7.5 percent payable at maturity. The accounting period ends December 31. Required: 1. Indicate the accounts, amounts, and effects (+ for increase, - for decrease, and NE for no effect) of the (a) issuance of the note on November 1, (b) impact of the adjusting entry on December 31, 2020, and (c) the payment of the note and interest on…arrow_forwardPROBLEM 5 NINE, INC. estimates its bad debt losses by aging its accounts receivable. The aging schedule of accounts receivable at Age of Accounts 0- 30 days 31 - 60 days 61 - 90 days 91 - 120 days Over 120 days December 31. below. Amount 2016. is presented P 843,200 461.000 192.400 76,650 39.400 Nine Inc.'s uncollectible accounts experience for the past 5 years are summarized in the 0 - 30 Days 0.3% following schedule: 61 - 90 Days 12% 91 - 120 Days 38% A/R Balance Dec. 31 P 1,312,500 999,999 465,000 816.000 1,243,667 31 - 60 Over 120 Year 2015 Days 1.8% Days 65% 1.6% 1.5% 2014 0.5% 11% 41% 70% 2013 69% 0.2% 0.4% 0.9% 9% 50% 47% 33% 2012 1.7% 10.2% 81% 2011 2.0% 9.7% 95% The balance of the allowance for bad debts account at December 31, 2016. (before adjustment) is P84,500. Requirements: 1. What is the average bad debt expense rate for "91-120 days" accounts? A. 76% В. 8.6% C. 10.38% D. 41.80%arrow_forward
- PA 4. LO 9.2 Jars Plus recorded $861,430 in credit sales for the year and $488,000 in accounts receivable. The uncollectible percentage is 2.3% for the income statement method, and 3.6% 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 debit balance in Allowance for Doubtful Accounts of $10,220, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $5,470, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.arrow_forwardCalculating the Average Collection Period [LO2] Ortiz Lumber Yard has acurrent accounts receivable balance of $431,287. Credit sales for the year justended were $3,943,709. What is the receivables turnover? The days’ sales inreceivables? How long did it take on average for credit customers to pay off theiraccounts during the past year?arrow_forwardExercise 5-65 (Algorithmic) Average Uncollectible Account Losses and Bad Debt Expense The accountant for Porile Company prepared the following data for sales and losses from uncollectible accounts: Losses from Year Credit Sales Uncollectible Accounts* 2015 $869,000 $10,625 2016 952,000 14,840 2017 1,083,000 16,790 2018 1,189,000 16,850 *Losses from uncollectible accounts are the actual losses related to sales of that year (rather than write-offs of that year). Required: 1. Calculate the average percentage of losses from uncollectible accounts for 2015 through 2018. Enter your answer as percentage, rounded to one decimal place (e.g. .0248563 to 2.5%). 2. Assume that the credit sales for 2019 are $1,200,000 and that the weighted average percentage calculated in Requirement 1 is used as an estimate of losses from uncollectible accounts for 2019 credit sales. Determine the bad debt expense for 2019 using the percentage of credit sales method. Round your answer to the nearest dollar.arrow_forward
- Problem 4-29 (Algo) Percent-of-sales method [LO4-3] Conn Man's Shops, a national clothing chain, had sales of $420 million last year. The business has a steady net profit margin of 8 percent and a dividend payout ratio of 25 percent. The balance sheet for the end of last year is shown. Cash Accounts receivable Inventory Plant and equipment Total assets Assets Balance Sheet End of Year (in $ millions) No O Yes Liabilities and Stockholders' Equity $ 42 Accounts payable. 47 93 $ 175 $ 357 Required new funds Accrued expenses Other payables. Common stock Retained earnings Total liabilities and stockholders' equity. *This includes fixed assets, since the firm is at full capacity a. Will external financing be required for the company during the coming year? $54 40 53 The firm's marketing staff has told the president that in the coming year there will be a large increase in the demand for overcoats and wool slacks. A sales increase of 10 percent is forecast for the company. 84 All balance…arrow_forwardces Problem 5-7A (Algo) Overestimating future uncollectible accounts (LO5-3, 5-4) Humanity International sells medical and food supplies to those in need in underdeveloped countries. Customers in these countries are often very poor and must purchase items on account. At the end of 2024, total accounts receivable equal $1,270,000. The company understands that it's dealing with high credit risk clients. These countries are often in the middle of a financial crisis, civil war, severe drought, or some other difficult circumstance. Because of this, Humanity International typically estimates the percentage of uncollectible accounts to be 35% (= $444,500). Actual write-offs in 2025 total only $270,000, which means that the company significantly overestimated uncollectible accounts in 2024. It appears that efforts by the International Monetary Fund (IMF) and the United Nations (UN), and a mild winter mixed with adequate spring rains, have provided for more stable economic conditions than were…arrow_forwardb. 8,275,000 c. 7,725,000 d. 7,875,000 PART III. PROBILEM SOLVING. Answer what is being asked. Please show your solutions. 1. Easy Company sells directly to retail customers. On January 1, 2020, the balance of the accounts receivable was P2,070,000 while the allowance for doubtful accounts was a credit of P78,000. The following data are gathered. Credit Sales Writeoffs Recoveries 22,000 2017 11,100,000 12,250,000) 260,000 295,000 300,000 2018 37,000 36,000 2019 14,650,000 15,000,000 2020 310,000 42,000 Doubtful accounts are provided for as a percentage of credit sales. The entity calculated the percentage annually by using the experience of the three years prior to the current year. Required: a. What is the percentage of credit sales to be used in computing doubtful accounts expense for 2020? b. What amount should be reported as doubtful expense for 2020? c. What amount should be reported as allowance for doubtful accounts on December 31, 2020? CS Scanned with CamScannerarrow_forward
- Problem 11-5A Calculate and analyze ratios (LO11-6) Cyberdyne Systems and Virtucon are competitors focusing on the latest technologies. Selected financial data is provided below. (Round your answers to 1 decimal place. Enter your answers in millions (i.e., $10,100,000 should be entered as 10.1).) ($ in millions) Cyberdyne Virtucon Net sales $ 43,905 $ 7,084 Net income 10,537 1,488 Operating cash flows 15,465 1,600 Total assets, beginning 62,905 16,584 Total assets, ending 64,905 16,284 Required: 1. Calculate the return on assets for both companies. 2. Calculate the cash return on assets for both companies. 3. Calculate the cash flow to sales ratio and the asset turnover ratio for both companies. 4. Which company has the more favorable ratios? multiple choice Cyberdyne Systems Virtuconarrow_forward2:25 l 4G Safari Done w9-questions (13 of 23) BE9-3 During its first year of operations, Gavin Company had credit sales of $3,000,000; $600,000 remained uncollected at year-end. The credit manager estimates that $31,000 of these receivables will become uncollectible. (a) Prepare the journal entry to record the estimated uncollectibles. (b) Prepare the current assets section of the balance sheet for Gavin Company. Assume that in addition to the receivables it has cash of $90,000, inventory of $130,000, and prepaid insurance of $7,500.arrow_forward4G Vo) .l 1 14:45 u. LTÉ2 ? 7% O แบบฝึกหัดท้ายบท 3. ให้ทำ 1. บันทึกรายการค้าข้างต้นในสมุดรายวันของบริษัทมีนาและบริษัทเมษา(สมมติถือเป็นการกู้ยืม) 2. สมมติว่าบริษัทมีนาไม่นำเงินมาชำระเมื่อตั๋วครบกำหนด จึงทำให้ตั๋วเงินรับชาดความเชื่อถือ ธนาคารไทยจึงแจ้งให้ บริษัทเมษาทราบ โดยบริษัทเมษาต้องรับผิดชอบด้วยยอดเงินตามตั๋วเมื่อครบกำหนดบวกค่าธรรมเนียม 25 บาท ธนาคารจะหักจำนวนเงินดังกล่าวจากบัญชีเงินฝากของบริษัท ให้บันทึกในสมุตรายวันทั่วไปของบริษัทเมษาสำหรับ รายการตั๋วเงินรับขาดความเชื่อถือ da 7 (Aging Analysis of Accounts Receivable) Nana Company's a large department store located in a metropolitan area, has been experiencing difficulty in estimating its bad debts. The company has decided to prepare an aging schedule for its outstanding accounts receivable and estimate bad debts by the due dates of its receivables. This analysis discloses the following information: Balance Age of Receivable Estimated Percentage Uncollectible $193,000 Under 30 days 0.8% 114,000 30-60 days 2.0% 73,000 61-120 days…arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning