please answer the 6 questions thank you Allowance Method of Accounting for Uncol
ID: 2528743 • Letter: P
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please answer the 6 questions thank you
Allowance Method of Accounting for Uncollectibles The following transactions and adjusting entries were completed for Mitchell Co. during the current fiscal year. Mitchell Co. had a credit balance of $12,000 in the Allowance for Doubtful Accounts at the beginning of the year (prior to the entries below). March 1 Received 50% of the $10,000 balance owed by Montgomery Co., a bankrupt business, and wrote off the remainder as uncollectible. Reinstated the account of Manderlee Co., which had been written off in the preceding year as uncollectible. Received a check from Manderlee Co. for $3,000. May 3 Mitchell Co uses the Analysis of Receivables method for setting the Allowance for Doubtful Accounts. Based on an analysis of the $800,000 receivable balance at Dec. 31, it was estimated that $30,000 would not be collectible. Dec. 31 On March 1 the entry to record the transaction was: On May 3 the entry to record the transaction was: On Dec. 31 the entry made to record the adjustment described was: At Dec. 31, after adjustment, the net realizable value of Accounts Receivable per the balance sheet was If Mitchell Co. had used the Percent of Sales method for booking Bad Debt Exp. for the year, what would the balance in the Allowance for Doubtful Accounts have been after adjustment. Sales were $1,500,000 and Mitchell estimates Bad Debt Expense at 1 % of sales. What would be the Bad Debt Expense?Explanation / Answer
Date Accounts Title Dr Cr 1-Mar Cash $5,000 Accounts Receivable $5,000 (being cash collected from customers) Allowance For Doubtful Accounts $5,000 Accounts Receivable $5,000 (being 50% balance witten off as uncollectible) 3-May Accounts Receivable $3,000 Allowance For Doubtful Accounts $3,000 (being account reinstated) Cash $3,000 Accounts Receivable $3,000 (being cash collected from customers) 31-Dec Bad Debt expenses 20000 Allowance For Doubtful Accounts 20000 30000-(12000-5000+3000) (being adjusting entry made) Net Realizable Value Accounts Receivable $800,000 Less: Allowance For Doubtful Accounts 30000 Net Realizable Value $770,000 In that case bad debt expenses would be 1500000*1% 15000 If any doubt please comment
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