Excel Fle Edit View Insert Format Tools Data Window Help PB-1A Template Insert P
ID: 2571821 • Letter: E
Question
Excel Fle Edit View Insert Format Tools Data Window Help PB-1A Template Insert Page Layout Formulas Data Review View Format Formatting as Tble 2 A) Total 0-30 31-60 61-90 91-120 Over 120 4 5 6 Accounts Receivable % uncollectible Estimated Bad Debts 377,000.00 $222,000.00 $90,000.00 $38,000.00 $15,000.00 $12,000.00 10% 1,200 196 4% 5% $10,120.00 $ 2,220 3,600 1,900 $1,200 Debit Credit 8 B) 9 Bad Debts Expense 10 Allowance for Doubtful Accounts 6,120.00 6,120.00 12 13 C) 4 Allowance for Doubtful Accounts 5 Accounts Receivable Debit Credit 5,000.00 $5,000.00 (Write- off $5,000) Debit Credit 8 D) 9 Accounts Receivable 0 Allowance for Doubtful Accounts 5,000.00 s 5,000.00 Debit Credit 3 Cash $5,000.00 Accounts Receivable 5,000.00 Sheet1Sheet2 Sheet3+Explanation / Answer
If the 3% of total Accounts receivable were used then Bad debt expense = 377,000 * 3% = 11,310
a) Estimated bad debts = 11,310
b) Bad debts expense 11,310
Allowance for Doubtful accounts 11,310
c) No change
d) No change
e) Accounts receivables consists of the Accounts Receivable from the recent sales as well the Accounts receivables from the past sales. In the case of estimating Bad debts expense as a percentage of total Accounts receivable, the percentage is applied to the total Accounts receivable to arrive at allowance for uncollectible.
If the ageing of Accounts receivable were used, it would be more rationale as different percentages will be applied based upon the age, as the Accounts receivables consists of the sales from the recent as well as past sales.
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