Concept explainers
Using an Aging Schedule to Estimate
Assume you were recently hired by Caffe D’Amore, the company that formulated the world’s first flavored instant cappuccino and now manufactures several lines of flavored cappuccino mixes. Given the company’s tremendous sales growth, Caffe D’Amore’s receivables also have grown. Your job is to evaluate and improve collections of the company’s receivables.
By analyzing collections of
Required:
- 1. Enter the above totals in a spreadsheet and then insert formulas to calculate the total estimated uncollectible balance.
- 2. Prepare the year-end
adjusting journal entry to adjust the Allowance for Doubtful Accounts to the balance you calculated above. Assume the allowance account has an unadjusted credit balance of $8,000. - 3. Of the customer account balances shown above on the last page of the aged listing, which should be your highest priority for contacting and pursuing collection?
- 4. Assume Jumpy Jim’s Coffee account is determined to be uncollectible. Prepare the journal entry to write off the entire account balance.
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FUNDAMENTALS OF FINANCIAL ACCOUNTING
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