Financial Accounting
15th Edition
ISBN: 9781337272124
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Chapter 9, Problem 9E
Kirchhoff Industries has a past history of uncollectible accounts, as follows. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule you completed in Exercise 9-8.
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Kirchhoff Industries has a past history of uncollectible accounts, as shown below.
Age Class
PercentUncollectible
Not past due
2%
1-30 days past due
6
31-60 days past due
25
61-90 days past due
35
Over 90 days past due
50
Estimate the allowance for doubtful accounts, based on the aging of receivables schedule below.
Kirchhoff IndustriesAging of Receivables Schedule
Customer
Balance
Not PastDue
1-30 DaysPast Due
31-60 DaysPast Due
61-90 DaysPast Due
Over 90 DaysPast Due
Subtotals
553,700
326,700
121,800
49,800
27,700
27,700
Conover Industries
18,900
18,900
Keystone Company
22,000
22,000
Moxie Creek Inc.
4,800
4,800
Rainbow Company
12,000
12,000
Swanson Company
27,700
27,700
Total receivables
639,100
354,400
133,800
54,600
49,700
46,600
Percentage uncollectible
2%
6%
25%
35%
50%
Allowance for Doubtful Accounts
fill in the blank 1
fill in the blank 2
fill in the blank 3…
Assume the aging of accounts receivable method was used by the company and that $7050 of the accounts receivable as of Dec 31 were estimated to be uncollectible. You are now required to:
a) Determine the amount to be charged to uncollectible expense( show your workings for the computation of this figure).
Net Zero Products, a wholesaler of sustainable raw materials, prepares the following aging of receivables analysis. (1) Estimate the balance of the Allowance for Doubtful Accounts using the aging of accounts receivable method. (2) Prepare the adjusting entry to record bad debts expense assuming the unadjusted balance in the Allowance for Doubtful Accounts is a $1,000 credit.
Chapter 9 Solutions
Financial Accounting
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- Waddell Industries has a past history of uncollectible accounts, as follows. Estimate the allowance for doubtful accounts, based on the aging of receivables schedule you completed in Exercise 9-8. The accounts receivable clerk for Waddell Industries prepared the following partially completed aging of receivables schedule as of the end of business on August 31: The following accounts were unintentionally omitted from the aging schedule and not included in the preceding subtotals: a. Determine the number of days past due for each of the preceding accounts as of August 31. b. Complete the aging of receivables schedule by adding the omitted accounts to the bottom of the schedule and updating the totals.arrow_forwardBlackhorse Productions, Incorporated, used the aging of accounts receivable method to estimate that its Allowance for Doubtful Accounts should be $22,350. The account had an unadjusted credit balance of $11,300 at that time. a. The appropriate bad debt adjustment was recorded. b. Later, an account receivable for $2,300 was determined to be uncollectible and was written off. Required: For each transaction listed above, indicate the amount and direction (+ for increase or - for decrease) of effects on the financial statement accounts and on the overall accounting equation. (Enter any decreases to Assets, Liabilities, or Stockholders Equity with a minus sign.) Assets Allowance for Doubtful Accounts Allowance for Doubtful Accounts a. b. b. Accounts Receivable 9,250 X = 1,100 X = (1,100) X = > Answer is complete but not entirely correct. Liabilities + + + + Bad Debt Expense Stockholders' Equity 9,250 Xarrow_forwardMy New Business uses aging of receivables to determine the value for allowance for doubtful accounts. Below are the balances and due dates for each account. Determine the number of days past due for each of these accounts. Complete the aging of receivables schedule. Determine the allowance for doubtful accounts and write the journal entry. Would this entry change if there was a debit balance of $1500? Credit balance of $1500? Customer Due Date Balance ABC 1/4/18 $10,000 Buy Rite 2/8/18 $7500 Calming Solutions 3/13/18 $2200 Dry Fast 4/23/18 $3456 Easy Peasie 5/3/19 $683 Fast Service 6/1/18 $5682 Going Out 7/9/18 $1200 Hurry Up 8/25/18 $3800 Igloos R Us 9/22/18 $570 Jumpin Jack Flash 10/10/18 $250 King Kong Kopies 11/14/18 $6893 Lite It Up 12/1/18 $476 Magnificent Marketing 1/15/19 $1500 Aging Categories Age Class Percent Uncollectible Not past due 1% 1-…arrow_forward
- Domino Company uses the aging of accounts receivable method to estimate uncollectible accounts expense. Domino began Year 2 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $44,390 and $3,470, respectively. During the year, the company wrote off $2,640 in uncollectible accounts. In preparation for the company's Year 2 estimate, Domino prepared the following aging schedule: Percentage Number of Days Receivables Likely to Be Past Due Amount Uncollectible Current $ 71,000 18 0 to 30 27,000 5% 31 to 60 6,860 10% 61 to 90 3,520 25% Over 90 3,200 50% Total $111,580 What will Domino record as Uncollectible Accounts Expense for Year 2?arrow_forwardDomino Company uses the aging of accounts receivable method to estimate uncollectible accounts expense. Domino began Year 2 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $46,310 and $3,650, respectively. During the year, the company wrote off $2,740 in uncollectible accounts. In preparation for the company's Year 2 estimate, Domino prepared the following aging schedule: Number of days past due Receivables amount % Likely to be uncollectible Current $77,000 1% 0-30 28,400 5% 31-60 7,460 10% 61-90 3,920 25% Over 90 3,600 50% Total $120,380 What will Domino record as Uncollectible Accounts Expense for Year 2?arrow_forwardBlackhorse Productions, In., used the aging of accounts receivable method to estimate that its Allowance for Doubtful Accounts should be $19,350. The account had an unadjusted credit balance of $10,000 at that time. Required: Prepare journal entries for each of the following. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) a. The appropriate bad debt adjustment was recorded. b. Later, an account receivable for $1,000 was determined to be uncollectible and was written off. View transaction list Journal entry worksheet 1 2 > Record the end-of-period adjustment for bad debts under the aging of accounts receivable method. Note: Enter debits before credits. Transaction General Journal Debit Credit a Record entry Clear entry View general journalarrow_forward
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- Cindy Bagnal, the manager of Cayce Printing Service, has provided the following aging schedule for Cayce’s accounts receivable: Cindy indicates that the $121,100 of accounts receivable identified in the table does not include$4,600 of receivables that should be written off.Required:1. Journalize the $4,600 write-off.2. Determine the desired postadjustment balance in allowance for doubtful accounts (round each aging category to the nearest dollar).3. If the balance in allowance for doubtful accounts before the $4,600 write-off was a debit of $700, compute bad debt expense. Prepare the adjusting entry to record bad debt expense.arrow_forwardBlackhorse Productions, Inc., used the aging of accounts receivable method to estimate that its Allowance for Doubtful Accounts should be $23,550. The account had an unadjusted credit balance of $11,900 at that time. a. The appropriate bad debt adjustment was recorded. b. Later, an account receivable for $2,900 was determined to be uncollectible and was written off. Required: For each transaction listed above, indicate the amount and direction +for increase or -for decrease) of effects on the financial statement accounts and on the overall accounting equation. (Enter any decreases to Assets, Liabilities, or Stockholders Equity with a minus sign.) Assets Liabilities Stockholders' Equityarrow_forwardBackground imformation: The Lake Lucerne Company uses the allowance method of estimating bad debts expense. An aging schedule is prepared in order to calculate the balance in the allowance account. The percentage uncollectible is calculated as followed: 1-30 days= 1.5% 31-60 days= 3.5% 61-90 days= 12% 91-365 days= 70% Calculate the number of days each receivable is outstanding and Complete the Schedule of Accounts Receivable. Both are showed in the images attached for context and data. Make sure to show all work and formulas.arrow_forward
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Accounts Receivable and Accounts Payable; Author: The Finance Storyteller;https://www.youtube.com/watch?v=x_aUWbQa878;License: Standard Youtube License