How do you compute an estimate for bad debt expense using the allowance method?
How do you compute an estimate for bad debt expense using the allowance method?
Homework Answers
Solution:
Estimated of bad debt expense can be calculated as follows under the allowance method:
Percentage of total accounts receivable method: In this method, company estimate for the value of bad debts as a percentage of the accounts receivable balance.
Aging method: In general, the longer an account balance is overdue, the less likely the debt is to be paid. Therefore, many companies maintain an accounts receivable aging schedule, which categorizes each customer's credit purchases by the length of time they have been outstanding. Each category's overall balance is multiplied by an estimated percentage of uncollectibility for that category, and the total of all such calculations serves as the estimate of bad debts.
Percentage of credit sales method: In this method, bad debts expense is estimated as a percentage of credit sales.
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How do you compute an estimate for bad debt expense using the allowance method?
Using the allowance method, what is the correct amount of a company's bad debt expense for...
Using the allowance method, what is the correct amount of a
company's bad debt expense for the year, given the above
information?
Consider the following information regarding the company's history: • Accounts Receivables total $950,000 • Estimates show that 4% of its receivables will be uncollectible • No balance in the Allowance account Using the allowance method, what is the correct amount of a company's bad debt expense for the year, given the above information? $38,000 $36,480 $42,750 $39,520
Using the allowance method for bad debts expense, the Allowance for Doubtful Accounts is decreased: When the estimate of...
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Using the allowance method for bad debts expense, the Allowance for Doubtful Accounts is decreased: Multiple...
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Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is...
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Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is...
Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2021, net credit sales totaled $6,300,000, and the estimated bad debt percentage is 1.30%. No previously written off accounts receivable were reinstated during 2021. The allowance for uncollectible accounts had a credit balance of $60,000 at the beginning of 2021 and 549,000, after adjusting entries, at the end of 2021 Required: 1. What is bad debt...
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Saint John Industries uses the percentage of credit sales method to estimate Bad Debt Expense. The company reported net credit sales of $550,000 during the year. Saint John has experienced bad debt losses of 2% of credit sales in prior periods. At the beginning of the year, Saint John has a credit balance in its Allowance for Doubtful Accounts of $4,500. No write-offs or recoveries were recorded during the year. What amount of Bad Debt Expense should Saint John recognize...
19) 20) Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance...
19)
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Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment? Bad Debt Expense 17,000 Allowance for Doubtful Accounts 17,000 Bad Debt Expense 19,500 Allowance for Doubtful Accounts 19,500 Bad Debt...
Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense E7-10...
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Using the allowance method, what is the correct amount of a
company's bad debt expense for the year, given the above
information?
Consider the following information regarding the company's history: • Accounts Receivables total $950,000 • Estimates show that 4% of its receivables will be uncollectible • No balance in the Allowance account Using the allowance method, what is the correct amount of a company's bad debt expense for the year, given the above information? $38,000 $36,480 $42,750 $39,520
Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2018, net credit sales totaled $5,300,000, and the estimated bad debt percentage is 1.40%. The allowance for uncollectible accounts had a credit balance of $50,000 at the beginning of 2018 and $44,000, after adjusting entries, at the end of 2018 Required 1. What is bad debt expense for 2018 as a percent of net credit sales?...
Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2021, net credit sales totaled $6,300,000, and the estimated bad debt percentage is 1.30%. No previously written off accounts receivable were reinstated during 2021. The allowance for uncollectible accounts had a credit balance of $60,000 at the beginning of 2021 and 549,000, after adjusting entries, at the end of 2021 Required: 1. What is bad debt...
Match the following 1. No effect 2. Allowance method 3. Bad debt expense 4. Allowance for Uncollectible Accounts 5. Net realizable value 6. Accounts receivable 7. Decrease 8. Increase X - 4 The account used to record sales on account to customers - 2 The procedure required for financial reporting purposes to account for uncollectible accounts - 5 The difference between total accounts receivable and the estimate of future bad debts The effect on total assets when estimating future bad...
19)
20)
Tanning Company analyzes its receivables to estimate bad debt expense. The accounts receivable balance is $390,000 and credit sales are $1,300,000. An aging of accounts receivable shows that approximately 5% of the outstanding receivables will be uncollectible. What adjusting entry will Tanning Company make if the Allowance for Doubtful Accounts has a credit balance of $2,500 before adjustment? Bad Debt Expense 17,000 Allowance for Doubtful Accounts 17,000 Bad Debt Expense 19,500 Allowance for Doubtful Accounts 19,500 Bad Debt...
Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense E7-10 Uncollectible is established as a percentage of credit sales. For 2018, net credit sales totaled $4,500,000, and the estimated bacd accounts; allowance method vs. direct Required debt percentage is 1.5%. The allowance for uncollectible accounts had a credit balance of$42.000 at the beginning of 2018 and $40,000, after adjusting entries, at the end of 2018. wite-off method 1. What is bad debt expense for...
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