Question
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 |
||||||
|
current |
880 |
5% |
||||||
|
31-60 |
550 |
14% |
||||||
|
61-90 |
440 |
50% |
||||||
|
91-120 |
220 |
75% |
||||||
|
121+ |
110 |
90% |
||||||
|
2,200 |
||||||||
1) What were the credit sales during 2020?
2) If the company records bad debts based on the aging analysis, what is the 12/31/20 adjusting entry? Net Realizable Value of Accounts Receivable (NRV)12/31/20?
3) If the company records bad debts as 12.0% of credit sales, what is the 12/31/20 adjusting entry? NRV of A/R?
PLEASE show work and adjusted journal entries
Homework Answers
Answer #1
As per Standards of Accounting proviosion should be recognised When
A) when enterprise has a present obligation as a result of past event
B) Reliable estimate can be made
How Provision entries wil be
Every year end
Provison of bad and dubt full account a/c Dr
Accounts Receivables A/c Cr
On occuring of bad bebt - Actual
Bad bebts account Dr
Proviion of bad bebts Cr
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