Reference no: EM131794592
Assignment
I. Morse Company uses the aging method to estimate bad debts. At the end of 2014, the allowance for doubtful accounts has a credit balance of $2,400 before write-offs and adjustments. Morse evaluates its past due accounts and decides to write off $4,000 of accounts receivable.
Morse then prepares the following aging schedule as of December 31, 2014. Note that the accounts written off are not included in the aging schedule.
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Category
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Amount
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% Uncollectible
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Not past due
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$140,000
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2%
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1 - 45 days
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30,000
|
6%
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|
Beyond 45 days past due
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10,000
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25%
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a. After recording bad debt expense, what is the final balance in the allowance for doubtful accounts at December 31, 2014?
b. What effect will bad debts have on Morse's reported net income for the period ended December 31, 2014? You may ignore income tax effects.
c. What amount of accounts receivable should Morse report on its December 31, 2014 balance sheet?
II. General Company reported the following information in its 2015 financial statements ($ in millions):
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2015
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2014
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Balance Sheet:
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|
|
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Accounts Receivable, net
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$ 953
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$ 1,084
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|
2015 Income Statement:
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|
|
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Sales Revenue
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$4,271
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|
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Bad Debt Expense
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14
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A note disclosed that the allowance for uncollectible accounts had a balance of $18 million and $16 million at the end of 2015 and 2014, respectively.
Required: Determine the amount of cash collected from customers during 2015.