Question

From inception of operations to December 31, 2020, Kingbird Corporation provided for uncollectible accounts receivable under...

From inception of operations to December 31, 2020, Kingbird Corporation provided for uncollectible accounts receivable under the allowance method. The provisions are recorded, based on analyses of customers with different risk characteristics. Bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account, and no year-end adjustments to the allowance account were made. Kingbird’s usual credit terms are net 30 days.

The balance in Allowance for Doubtful Accounts was $156,000 (Cr.) at January 1, 2020. During 2020, credit sales totaled $10,800,000, the provision for doubtful accounts was determined to be $216,000, $108,000 of bad debts were written off, and recoveries of accounts previously written off amounted to $18,000. Kingbird installed a computer system in November 2020, and an aging of accounts receivable was prepared for the first time as of December 31, 2020. A summary of the aging is as follows.

Classification by
Month of Sale

Balance in
Each Category

Estimated %
Uncollectible

November–December 2020 $1,296,000 2%
July–October 780,000 10%
January–June 504,000 25%
Prior to 1/1/20 180,000 80%
$2,760,000


Based on the review of collectibility of the account balances in the “prior to 1/1/20” aging category, additional receivables totaling $72,000 were written off as of December 31, 2020. The 80% uncollectible estimate applies to the remaining $108,000 in the category. Effective with the year ended December 31, 2020, Kingbird adopted a different method for estimating the allowance for doubtful accounts at the amount indicated by the year-end aging analysis of accounts receivable.

A.) Prepare a schedule analyzing the changes in Allowance for Doubtful Accounts for the year ended December 31, 2020. Show supporting computations in good form. (Hint: In computing the 12/31/20 allowance, subtract the $72,000 write-off.)

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
From its first day of operations to December 31, 2020, Pronghorn Corp. provided for uncollectible accounts...
From its first day of operations to December 31, 2020, Pronghorn Corp. provided for uncollectible accounts receivable under the allowance method: 1. Entries for bad debt expense were made monthly based on 2.5% of credit sales. 2. Bad debts that were written off were charged to the Allowance for Doubtful Accounts. 3. Recoveries of bad debts previously written off were credited to the allowance account. 4. No year-end adjustments were made to the allowance account. The balance in Allowance for...
Based on Problem 7-4 Situation #2: From inception of operations to December 31, 2020, Bridgeport Corporation...
Based on Problem 7-4 Situation #2: From inception of operations to December 31, 2020, Bridgeport Corporation provided for uncollectible accounts receivable under the allowance method. The provisions are recorded, based on analyses of customers with different risk characteristics. Bad debts written off were charged to the allowance account; recoveries of bad debts previously written off were credited to the allowance account, and no year-end adjustments to the allowance account were made. Bridgeport’s usual credit terms are net 30 days. The...
1. Kingbird Company’s unadjusted trial balance at December 31, 2020, included the following accounts. Debit Credit...
1. Kingbird Company’s unadjusted trial balance at December 31, 2020, included the following accounts. Debit Credit Accounts receivable $55,400 Allowance for doubtful accounts 5,960 Net sales $1,262,800 Kingbird Company estimates its bad debt expense to be 6% of gross accounts receivable. Determine its bad debt expense for 2020. Bad debt expense for 2020 $ 3. Waterway Co. provides for doubtful accounts based on 2% of gross accounts receivable, The following data are available for 2020. Credit sales during 2020 $4,351,800...
Estimating and Recording Bad Debt Estimates and Write-offs; Reporting of Accounts Receivable At December 31, 2020,...
Estimating and Recording Bad Debt Estimates and Write-offs; Reporting of Accounts Receivable At December 31, 2020, its annual year-end, the accounts of Sun Systems Inc. show the following. 1. Sales revenue for 2020, $180,000, of which one-sixth was on account. 2. Allowance for doubtful accounts, balance December 31, 2019, $900 credit. 3. Accounts receivable, balance December 31, 2020 (prior to any write-offs of uncollectible accounts during 2020), $18,050. 4. Uncollectible accounts to be written off, December 31, 2020, $1,050. 5....
Big Company reported the following on its December 31, 2019 balance sheet (000’s omitted): Accounts Receivable,...
Big Company reported the following on its December 31, 2019 balance sheet (000’s omitted): Accounts Receivable, net of allowance for doubtful accounts of $462                           $1,788 The company makes its adjusting entry for bad debts at the end of the year. During 2020, cash collections were $3,432. In addition, $368 in accounts receivable were written off and $3 was collected from an account written off in 2018. An aging of accounts receivable reveals the following: Age Group Amount Estimated % Uncollectible...
The following is an aging schedule for a company’s accounts receivable as at December 31, 2019:...
The following is an aging schedule for a company’s accounts receivable as at December 31, 2019: Number of days past due Customer's name Total amount owed Current (not yet due) 1–30 31–60 61–90 Over 90 Aber $32,000 $9,000 $23,000 Bohr 46,000 $46,000 Chow 52,000 15,000 22,000 $15,000 Datz 22,000 $22,000 Others 158,000 95,000 15,000 13,000 15,000 20,000 $310,000 $156,000 $46,000 $36,000 $30,000 $42,000 Estimated percentage that will be uncollectible 3% 6% 10% 25% 50% Estimated value of uncollectibles $39,540 $4,680...
At December 31, 2012, SPK Inc reported the following information on its balance sheet: Accounts Receivable...
At December 31, 2012, SPK Inc reported the following information on its balance sheet: Accounts Receivable 900,000 Allowance for Doubtful Accounts 54,000 (credit) During 2013, the company had the following transactions related to receivables: Sales on Account 3,000,000 Collections on Account 2,850,000 Write-offs of uncollectible accounts 60,000 Recovery of previously written off accounts 12,000 A) Assume that bad debts are estimated to be 5% of year end receivables, determine the Net Realizable Value (after adjustments) of Accounts Receivable. B) If...
Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following...
Daley Company estimates uncollectible accounts using the allowance method at December 31. It prepared the following aging of receivables analysis. Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $ 660,000 $ 414,000 $ 108,000 $ 54,000 $ 36,000 $ 48,000 Percent uncollectible 1 % 2 % 5 % 7 % 10 % a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 6% of total accounts...
On December 31, 2019, Mills Manufacturing Ltd. had a $173,000 balance in its Accounts Receivable and...
On December 31, 2019, Mills Manufacturing Ltd. had a $173,000 balance in its Accounts Receivable and a $9,800 balance in its Allowance for Doubtful Accounts. During 2020, the company made total sales of $902,000, of which $218,000 were cash sales. By the end of the year, Mills had received payments of $598,000 from its customers on account. The company also wrote off as uncollectible $13,800 of its receivables when it learned that these customers had declared bankruptcy. The company was...
Daley Company estimates uncollectible accounts using the allowance method on December 31. It prepared the following...
Daley Company estimates uncollectible accounts using the allowance method on December 31. It prepared the following aging of receivables analysis. Days Past Due Total 0 1 to 30 31 to 60 61 to 90 Over 90 Accounts receivable $ 570,000 $ 396,000 $ 90,000 $ 36,000 $ 18,000 $ 30,000 Percent uncollectible 1 % 2 % 5 % 7 % 10 % a. Estimate the balance of the Allowance for Doubtful Accounts assuming the company uses 4.5% of total accounts...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT