At the end of 2011, Geisel, Inc has a $1,700 debit balance in the Allowance for

Question

At the end of 2011, Geisel, Inc has a $1,700 debit balance in the Allowance for Doubtful Accounts, before adjusting entries were prepared. Credit sales for 2011 totaled $517,000. Sales returns for 2011 were $17,000. Credit Sales for 2010 were $627,000. Sales returns for 2010 were $11,000. The following aging analysis of Accounts Receivable was prepared at 12/31/11: Age Classification 12/31/11 $ Amount Estimated % Uncollectible Current/not yet due 118,000 3 % 1-30 days past due 19,000 4 % 31-60 days past due 6,000 6 % 61-90 days past due 9,000 14 % over 90 days past due 11,000 34 % Total $ 163,000 (a) Prepare the 12/31/11 adjusting entry using the aging analysis approach to estimate bad debts. (Omit the "$" sign in your response.) General Journal Debit Credit (b) Calculate the accounts receivable turnover ratio and the days to collect for 2010 and 2011. The net receivables balance reported on the company's 12/31/09 financial statements was $112,000. The net receivables balance reported on the 12/31/10 financial statements was $123,000. (Round your intermediate calculations and final answers to 1 decimal place. Use 365 days a year.) 2011 2010 Accounts receivable turnover ratio Days to collect

Explanation / Answer

i have an example for u Accounts receivable $613,077 Less: Allowance for doubtful accounts 42,467 1. Sales on account $2,559,270 Dr Accounts Receivable 2,559,270 Cr Sales 2,559,270 2. Sales returns and allowances 42,467 Dr Sales Returns and Allowances 42,467 Cr Accounts Receivable 42,467 3. Collections of accounts receivable 2,217,230 Dr Cash 2,217,230 Cr Accounts Receivable 2,217,230 4. Write-offs of accounts receivable deemed uncollectible 50,930 Dr Allowance for Doubtful Accounts 50,930 Cr Accounts Receivable 50,930 5. Recovery of bad debts previously written off as uncollectible 16,022 Dr Accounsts Receivable 16,022 Cr Allowance for Doubtful Accounts 16,022 Dr Cash 16,022 Cr Accounts Receivable 16,022 Enter the January 1, 2012, balances in Accounts Receivable and Allowance for Doubtful Accounts, post the entries to the two accounts (use T accounts), and determine the balances. Accounts Receivable 613,077 + 2,559,270 - 42,467 - 2,217,230 - 50,930 + 16,022 - 16,022 = 861,720 Allowance for Doubtful Accounts 42,467 - 50,930 + 16,022 = 7,559 Prepare the journal entry to record bad debts expense for 2012, assuming that aging the accounts receivable indicates that estimated bad debts are $50,768. 50,768 - 7,559 = 43,209 adjustment Dr Bad Debt Expense 43,209 Cr Allowance for Doubtful Accounts 43,209 Compute the receivables turnover ratio and average collection period assuming that estimated bad debts are 50,768. Receivables turnover ratio. Net Credit Sales / Avg Net Accounts Recevable (2,559,270 - 42,467 = 2,516,803 Net Credit Sales [(613,077 - 42,467) + (861,720 - 50,768)] / 2 = 690,781 Avg. Net Rec. 2,516,803 / 690,781 = 3.64 Avg. Collection Period. 365 / 3.64 = 100.27 Days

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