p8-2a Of the above accounts, $5,000 is determined to be specifically uncollectib
ID: 2452746 • Letter: P
Question
p8-2a Of the above accounts, $5,000 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible account. The company collects $5,000 subsequently on a specific account that had previously been determined to be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection. Comment on how your answers to (a)-(d) would change if Rcynolds.com used 3% of total accounts receivable, rather than aging the accounts receivable. What are the advantages to the company of aging the accounts receivable rather than applying a percentage to total accounts receivable? At December 31, 2013, Weiss Imports reported this information on its balance Accounts receivable $600,000 Less: Allowance for doubtful accounts 37,000 During 2014, the company had the following transactions related to receivables. Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. (Omit cost of goods sold entries.) Enter the January 1,2014, balances in Accounts Receivable and Allowance for Doubtful Accounts, post the entries to the two accounts (use T-accounts), and determine the balances. Prepare the journal entry to record bad debt expense for 2014, assuming that aging the accounts receivable indicates that estimated bad debts are $46,000. Compute the accounts receivable turnover and average collection period. Presented below is an aging schedule for Bosworth Company.Explanation / Answer
Accounts receivable $613,077
Less: Allowance for doubtful accounts 50,000
1. Sales on account $2,500,000
Dr Accounts Receivable 2,500,000
Cr Sales 2,500,000
2. Sales returns and allowances 50,000
Dr Sales Returns and Allowances 50,000
Cr Accounts Receivable 50,000
3. Collections of accounts receivable 2,200,000
Dr Cash 2,200,000
Cr Accounts Receivable 2,200,000
4. Write-offs of accounts receivable deemed uncollectible 41,000
Dr Allowance for Doubtful Accounts 41,000
Cr Accounts Receivable 41,000
5. Recovery of bad debts previously written off as uncollectible 15,000
Dr Accounsts Receivable 15,000
Cr Allowance for Doubtful Accounts 15,000
Dr Cash 15,000
Cr Accounts Receivable 15,000
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 + 2,500,000 - 50,000 - 2,200,000 - 41,000 + 15,000 - 15,000 = 861,720
Allowance for Doubtful Accounts
50,000 - 41,000 + 15,000 = 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
(2,500,000 - 50,000 = 2,516,803 Net Credit Sales
[(613,077 - 50,000) + (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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