Prepare the year-end adjusting entry for bad debts

Assignment Help Accounting Basics
Reference no: EM131564657

Problem - Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2015 balance sheet disclosed the following:

Current assets:

Receivables, net of allowance for uncollectible accounts of $33.000          $447,000

During 2016, credit sales were $1,765.000, cash collections from customers $1,845.000, and $38,000 in accounts receivable were written off. In addition, $3.300 was collected from a customer whose account was written off in 2015. An aging of accounts receivable at December 31, 2016, reveals the following:

Age Group

Percentage of Year-End
Receivables in Group

Percent
Uncollectible

0-60 days

70%

5%

61-90 days

20

15

91-120 days

5

20

Over 120 days

5

40

Required:

1. Prepare summary journal entries to account for the 2016 write-offs and the collection of the receivable previously written off.

2. Prepare the year-end adjusting entry for bad debts according to each of the following situations:

a. Bad debt expense is estimated to be 4% of credit sales for the year.

b. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable.

c. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is determined by an aging of accounts receivable.

Reference no: EM131564657

Questions Cloud

How the internet is loosening our grip on the truth : How the Internet Is Loosening Our Grip on the Truth and The Rise and Fall of Fake News.
Formulate new operations strategy for selected organization : Formulate a new operations strategy for the selected organization based on the four competitive priorities (i.e., cost, quality, time, and flexibility).
What are the political options for texas residents : What are the political options for Texas residents to challenge the government and Big Oil companies to improve their air quality and environment?
Find the distance of the previous oscillation : During each oscillation, a pendulum swings through 85% of the distance of the previous oscillation. If the pendulum swings through 80.8 cm.
Prepare the year-end adjusting entry for bad debts : Prepare summary journal entries to account for the 2016 write-offs and the collection of the receivable previously written off
Creating potential marketing strategies : Student can suggest marketing strategy implications based on the type of consumer offering under examination
Write reflection paper on your own time-management approach : Write a reflection paper on your own time-management approach. Write your reflection in a Microsoft Word document.
Discuss concept from class that is element of marketing plan : Discuss at least two concepts from class that are elements of a marketing plan and are important tools to your entrepreneurial business' success.
Discuss the company and clearly define the ethical dilemma : Research a company in the news for an ethical dilemma. In a 8 - 10 slide PowerPoint presentation discuss the company and clearly define the ethical dilemma.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How the cash flow statement of an enterprise fund differs

Describe the test for determining whether a governmental fund is a major fund. Describe the test for determining whether an enterprise fund is a major fund.

  Budgeted variable factory overhead rate

Davie Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable factory overhead rate is $6.00 per direct labor-hour; the budgeted fixed factory overhead is $92,000 per month, of which $16..

  Merchandise purchases are in transit under terms of fob

errors as controller of the lerner company which uses a periodic inventory system you discover the following errors in

  Shamrock company had net income of 30000 on january 1 the

shamrock company had net income of 30000. on january 1 the number of shares of common stock outstanding were 8000. on

  An employee earns 40 per hour and 175 times that rate for

an employee earns 40 per hour and 1.75 times that rate for all hours in excess of 40 hours per week. assume that the

  Determining the firm net income

If a firm has a breakeven point of 20,000 units and the contribution margin on the firm's single product is $3.00 per unit and fixed costs are $60,000, What will the firm's net income be at sales of 30000 units?

  Give your views on given statement

Young people with little wealth should not invest money in risky assets such as the stock market, because they can't afford to lose what little money they have." -  Do you agree or disagree with this statement? Why?

  With regard to the loan for a down payment on your mortgage

you were recently admitted to college and your aunt tillie has agreed to fund the tuition for your education. the

  Where should amc report any gain or loss on this transaction

Prepare the journal entries to record the issuance of the 4 percent bonds and the early retirement of the 6 percent bonds. Assume both sets of bonds were issued at face value. Where should AMC report any gain or loss on this transaction? What dollar ..

  How do the amount and form of the business asset change

When a business asks a customer to sign a note receivable for an extension of time on the customer's account receivable?

  Determine the amount of net income or loss

Determine the amount of net income or loss Thomas reported on its 2013 income statement.

  Kern company sells merchandise on account for 6000 to block

kern company sells merchandise on account for 6000 to block company with credit terms of 210 n30. block company

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd