Kate Miller owns a dance studio in Los Angeles, California. Unfortunately, many
ID: 2480998 • Letter: K
Question
Kate Miller owns a dance studio in Los Angeles, California. Unfortunately, many of Kate’s students are struggling actors and actresses who lack the ability to pay There currently exists a balance in the allowance for uncollectible accounts totaling $2,700. Age Accounts Receivable Historical Estimate Classification Outstanding Balance of Non-Collection 0–30 days 44,000 4% 31–60 days 31,000 8% 61–90 days 22,000 12% 91–120 days $13,000 14% 121–150 days 9,000 20% > 150 days 5,000 50% Kate writes off all receivables having a very low probability of collection (those accounts over 150 days). What balance sheet accounts will be affected, and in what amount? Indicate which balance sheet accounts will be affected by choosing Yes or No for each account: If an acount is a 'yes' place the dollar value in the column next to Y/N Yes / No $ Amount Net revenue Accounts receivable Bad debt expense Allowance for uncoll. Acc Kate Miller owns a dance studio in Los Angeles, California. Unfortunately, many of Kate’s students are struggling actors and actresses who lack the ability to pay There currently exists a balance in the allowance for uncollectible accounts totaling $2,700. Age Accounts Receivable Historical Estimate Classification Outstanding Balance of Non-Collection 0–30 days 44,000 4% 31–60 days 31,000 8% 61–90 days 22,000 12% 91–120 days $13,000 14% 121–150 days 9,000 20% > 150 days 5,000 50% Kate writes off all receivables having a very low probability of collection (those accounts over 150 days). What balance sheet accounts will be affected, and in what amount? Indicate which balance sheet accounts will be affected by choosing Yes or No for each account: If an acount is a 'yes' place the dollar value in the column next to Y/N Yes / No $ Amount Net revenue Accounts receivable Bad debt expense Allowance for uncoll. AccExplanation / Answer
Yes / No $ Amount Account Net revenue No Accounts receivable Yes 2750 Balance Sheet account Bad debt expense Yes 50 Income Statement account Allowance for uncoll. Acc Yes 2750 Balance Sheet account Entry of written off Bad Debt Expense 50 Allowance for Uncollectible accounts 50 (as allowance has a cr balance is $2700 it has to be increased by $50 to make the balance $2750 which is the amount to be written off) Allowance for Uncollectible accounts 2750 Accounts Receivable (5500*50%) 2750 (Being accounts written off)
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