# Noren Company uses the balance sheet aging method to account for uncollectible debt on receivables. The following is the past-due category information for outstanding receivable debt for 2019. To manage earnings more favorably, Noren Company considers changing the past-due categories as follows. A. Complete each table by filling in the blanks. B. Determine the difference between totals uncollectible. C. Complete the following 2019 comparative income statements for 2019, showing net income changes as a result of the changes to the balance sheet aging method categories. D. Describe the categories change effect on net income and accounts receivable.

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### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685

#### Solutions

Chapter
Section
FindFindarrow_forward

### Principles of Accounting Volume 1

19th Edition
OpenStax
Publisher: OpenStax College
ISBN: 9781947172685
Chapter 9, Problem 9PA
Textbook Problem
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## Noren Company uses the balance sheet aging method to account for uncollectible debt on receivables. The following is the past-due category information for outstanding receivable debt for 2019.To manage earnings more favorably, Noren Company considers changing the past-due categories as follows.A. Complete each table by filling in the blanks.B. Determine the difference between totals uncollectible.C. Complete the following 2019 comparative income statements for 2019, showing net income changes as a result of the changes to the balance sheet aging method categories.D. Describe the categories change effect on net income and accounts receivable.

To determine

(a)

Introduction:

Accounts receivables refers to the amount of money which is yet to be paid by the debtors of the firm. It arises from the credit sales made by the companies. An account of “accounts receivables” is prepared to show these amounts.

To complete:

Each part of the table by filling the blanks.

### Explanation of Solution

 0-30 DaysPast Due 31-90 DaysPast Due Over 91 DaysPast Due Account receivable amount(A) $120,000$80,000 $65,500 Percent uncollectible(B) 7% 20% 40% Total per category (A×B)$8,400 $16,000$26,200 Total uncollectible ($8,400+$16,000+$26,200)$50,600

Table(1)

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To determine

(b)

The difference between the total uncollectible amount.

To determine

(c)

To complete:

The income statement of the company showing changes in net income due to change in method of estimating bad debts.

To determine

(d)

To describe:

The category change effect on net income and accounts receivable.

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