At the end of the prior year, the Danner Dogcatcher Service, Inc. had receivable
ID: 2424937 • Letter: A
Question
At the end of the prior year, the Danner Dogcatcher Service, Inc. had receivables of $4,678,345. During the present year, they had sales of $24,950,950. Collections totaled $22,875,565. At the end of the prior year, the balance in the allowance for doubtful accounts was $47,000. At the end of the current year, (prior to adjustments) the balance was $(3,250). The company uses the aging method for arriving at the bad debt allowance. The strata of debt at the end of the year were as follows: Please provide the following: A workpaper that displays the account changes leading to ending balances for A/R, Bad Debt Expense, Write Offs, and the Allowance for Doubtful Accounts. Prepare the footnote for accounts receivable.Explanation / Answer
Foot note of A/c receivable:
Total Receivables at the end of C.Y= Opening balance+(sales-Collections)of the year
=4678345+(24950950-22875565)
=4678345+2075385
=6753730
Total uncollectable (Bad Debts) =29041+10130.6+10130.6+33768.65
=83070.85
A) ending bal.of A/c receivable= Total Receivables-bad debts
=6753730-83070.85
=6670659.15
B) Bad debts balance at the end=83070.85
C) written offs = opening provisional balanc- closing balance prior to changes
= 47000-(3250)
=50250.
D) Provision at the end =3250+83070.85
=86320.85
Strata Proaportion of receivables in Strata Uncollectable Current 86%(6753730)=5808207.8 0.5%(5808207.8)=29041 31-60 Days 10%(6753730)=675373 1.5%(675373)=10130.6 61-90 Days 3%(6753730)=202611.9 5%(202611.9)=10130.6 >90 Days 1%(6753730)=67537.3 50%(67537.3)=33768.65
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