Question

using the information about trade accounts receivable on the balance sheet, determine the percentage of gross (or total) accounts receivable that S company has to set aside in the allowance 2016 and 2015. Briefly explain what this percentage represents. Assuming S company wrote off $1,665 of trade accounts receivable as uncollectible in 2016, what was the amount of bad debt expense that S company would have recorded on the income statement 2016?

Dollers and shares in thousands) At December 31 Assets Current Assets Cesh and cash equivalents $ 257,226 $ 182.434 625,411627,962 43,55346,801 Trade accounts recelvable, net of alowances of $10,884 in 2016 and St1069 in 2015 Other recevables Inventories 127446 139,589 Fnished and in process Materials and supplies 245,368 245,894 64,698 1.348,768 1307 378 060,017 1112,036 1,092,215 1140,461 224,958245,095 52,626 49,764 Propery, Plant and Equipment Net Goodw Other Intangible Assets, Ner Long-term Deferred Income Taxes Other Assets 42,130 55,115 Total Assets $3,923,203 $4,013,685 Liabilites and Equity Current Liablites Payable to supplers Accrued oxpenses and other Accrued wages and other compensation Notes payable and current portion of long-term debt Accrued taxes D477,831 $ 508.057 205,303225,303 68,693 68.924 32045 113.097 7.135 18.744 Long-term Debt Pension and Other Postretrement Benefts Defered Inicome Taxes ther Liabilities 802,616922.56 1,020,6981015,270 447,339432.964 72.933 38,092 37,129 59,753 Shareholders' Equiy Serial preferred stock, no par value Authortzed 30000 shares 0 shares Issued and outstanding as of December 31, 2016 and 2015 Common sharos Authorized 300,000 sheres 99,183 and 100.944 shares ssued and outstanding at Docember 31,2015 and 2015, respectvely Coptsl in excess of stapod valbe Aocumusted otber comprehensive loss Retained earnings Total Shoreholders'Equty 7.175 321,050 404,460 (738,380702.533 942.5131.803 827 ,532,358 1.512,929 7.175 ntetests Totat E Ton Uabtides and Equty 1,554 708 .532973 $3,923203 $4013685 The Notes beginning on page - ane an Inegral part of these financial statoments

Answer 1

Answer

2016 2015 Accounts receivable, gross Accounts receivable, net Allowance for Doubtful Accounts $636,295 $639,031 C-A+B $625,411 $627,962 A $10,884 $11,069 B rcentage of gross (or total) accounts receivable 1.71% 1.73%B/C Percentage-of-receivables method: The percentage-of-receivables method estimates uncollectible accounts by determining the desired size of the Allowance for Uncollectible Accounts. The S company would multiply the ending balance in Accounts Receivable by a rate (or rates) based on its uncollectible accounts experience. In the percentage-of-receivables method, the company may use either an overall rate or a different rate for each age category of receivables Allowance for Doubtful Accounts Beginning Balance Bad debt expense Write off Ending Balance $11,069 $1,480 Plug-in $1,665 $10,884 Bad Debt Expense 2016 $1,480 Journalize the recording of bad debt expense for 2016: General Journal Bad Debt Expense Allowance for Doubtful Accounts Debit bit Credit $1,480 $1,480 Journalize the write-off of receivables for 2016 Allowance for Doubtful Accounts Accounts Receivable $1,665 1,665