Question

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The following is a portion of the current asset section of the balance sheets of HiROE Co., at December 31, 2020 and 2019:

	12/31/20	12/31/19
Accounts receivable, less allowance for uncollectible accounts of $9,500 and $4,300, respectively	$157,200	$117,000

Required:
b. If bad debts expense for 2020 totaled $10,100, what was the amount of accounts receivable written off during the year? (Hint: Use the T-account model of the Allowance account, plug in the three amounts that you know, and solve for the unknown.)

c. The December 31, 2020, Allowance account balance includes $3,300 for a past due account that is not likely to be collected. This account has not been written off.
(1) If it had been written off, will there be any effect of the write off on the working capital at December 31, 2020?

• Yes

• No

(2) If it had been written off, will there be any effect of the write off on net income and ROI for the year ended December 31, 2020?

• Yes

• No

d. The level of HiROE's sales in 2020 is probably higher as compared to 2019.

• True

• False

e-1. Calculate the ratio of the Allowance for Uncollectible Accounts balance to the Accounts Receivable balance at December 31, 2020 and 2019. (Enter your answers as a percentage rounded to 1 decimal place (i.e., 3.2).)

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

Answer 15 Part b) 16 Amount written off in 2020 17 = Beginning uncollectible balance + bad debt expense - ending balance 18 = 4300 +10100-9500 19 = $4900 21 Thus the correct answer account receivable written off = $ 4900 23 Part ) 24 1) The correct answer is No Because net account receivable wont change as account receivable and allowance 6account both will decrease, thus net receivables will remain same. !8 2)The correct answer is No Because net income will not change as account receivable will be written off 10 against allowance for uncollectable, so it will also not impact the ROI

2 d) The correct answer is Yes As account receivabes has been increased compared to previous year. B Ratio for Allowance for uncollectible Account balance to Account Receivable for December 31, 2020 = Allowance for uncollectible / account receivable * 100 = 9500 / (157200+9500) * 100 = 5.7% 2 Ratio for Allowance for uncollectible Account balance to Account Receivable for December 31, 2019 B = Allowance for uncollectible / account receivable *100 = 4300 /(117000+4300) * 100 = 3.5%