Question

QUESTION 2 Use the following information to answer the next 3 questions: On December 31, 2015, a company reported the following information on its balance sheet: Accounts receivable $838,000 Less: Allowance for Doubtful Accounts 46,000 (cr.) During 2016, the company had the following transactions related to receivables: Sales on account $3,000,000 Collections of accounts receivable 2,712,000 Write-offs of accounts determined to be uncollectible 31,500 Recovery of prior write-offs 6,600 Determine the ending accounts receivable balance on December 31, 2016. • A. $1,094,500

Answer 1

Answer Determine the ending accounts receivable balance on December 31, 2016 Amount ($) Amount ($) $838000 $(46000) $792000 particulars ance of Accounts receivable less: Beginning Balance of Allowance for Doubtful Accounts Net Balance of Accounts receivable as on January 01, 2016 Sales on account during 2016 less: collections of Accounts receivable lesso Write off accounts determined to be uncollectible Additional balance of Accounts receivable made during 2016 Ending Balance of Accounts receivable on Dec 31, 2016 $ 3000000 $(2712000) $(31500) $256500 $1048500 So The Ending Balance of Accounts Receivable on Dec 31, 2016 is $1048500.

Answer Determine the ending accounts receivable balance on December 31, 2016 Amount ($) Amount ($) $838000 $(46000) $792000 particulars ance of Accounts receivable less: Beginning Balance of Allowance for Doubtful Accounts Net Balance of Accounts receivable as on January 01, 2016 Sales on account during 2016 less: collections of Accounts receivable lesso Write off accounts determined to be uncollectible Additional balance of Accounts receivable made during 2016 Ending Balance of Accounts receivable on Dec 31, 2016 $ 3000000 $(2712000) $(31500) $256500 $1048500 So The Ending Balance of Accounts Receivable on Dec 31, 2016 is $1048500.

( Determination of the balance in the allowance for Doubtful accounts (after Adjustment) on December 31, 2016 Amount ($) particulars $46000 Beginning balance of Allowance for Doubtful Debt Adjustments :- write off of accounts determined to be uncollectible Recovery of prior writte off Allowances for Doubtful Debt made during 2016 ($3000000x3) (31500) $ 6600 $90000 100 Balance in the allowance for Doubtful Accounts & $111100 on Dec 31, 2016 So, The Balance in the allowance for Doubtful. Accounts on Dec 31,2016 is $ Illloo.

Determination of the Bad debt expense for 2016 - Bad debt expense = 4% of Receivables for 2016 Receivables = $ 838000+ $3000 000 - $2712000 - $31500 = $ 10 94500 Bad debt Expense = $ 1094500 x 4 100 for 2016 = $43780