On December 31, the Jacob, Inc. general ledger contained the following balances prior to write-offs and adjustments:
Trade Accounts Receivable$ 623,450
Allowance for Doubtful Accounts15,800
(credit)Net Credit Sales2,529,000
Before completing an aging analysis to determine the estimated amount uncollectible, Jacob decided to write off $7,500 of an account past due over 360 days.Aging of the accounts receivable balance after the write-off on December 31 indicated the following:
Estimated
Percentage
AgeAmount
Uncollectible
Under 30 days $358,900
1.5%
30-90 days 134,000
3.0%
91-180 days 96,000
7.0%
181-360 days 22,700
20.0%
Over 360 days 4,350
60.0%
$615,950
Required:
a.Prepare the necessary journal entry to record the write-off.b.Prepare the adjusting journal entry at December 31 to record Jacob, Inc.'s estimated bad debts assuming that the company uses the aging of accounts receivable method.c.What is the net realizable value of accounts receivable on the December 31 balance sheet?
What will be an ideal response?
| a. | Allowance for Doubtful Accounts | 7,500 | ? | |
| ? | ? | Accounts Receivable | ? | 7,500 |
| ? | ? | ? | ? | |
| b. | 0.015´$358,900 = | $ 5,384 | ? | |
| ? | 0.03´$134,000 = | 4,020 | ? | |
| ? | 0.07´$96,000 = | 6,720 | ? | |
| ? | 0.20´$22,700 = | 4,540 | ? | |
| ? | 0.60´$4,350 = | 2,610 | ? | |
| ? | ? | $23,274 | ? | |
| ? | Credit balance in allowance account (after write-off) | (8,300) | ? | |
| ? | ? | $14,974 | ? | |
| ? | ? | ? | ? | |
| ? | Bad Debt Expense | 14,974 | ? | |
| ? | ? | Allowance for Doubtful Accounts | ? | 14,974 |
| ? | ? | ? | ? | |
| c. | Accounts receivable | $615,950 | ? | |
| ? | Less allowance for doubtful accounts | (23,274) | ? | |
| ? | Net accounts receivable | $592,676 | ? | |
You might also like to view...
The direct method of service department cost allocation allows a partial recognition of reciprocal relationships among service departments before assigning costs to revenue-producing areas
Indicate whether the statement is true or false
How are period expenses recognized and measured?
When you're showing a bullet slide:
a. the first image should normally include the title but no bullets b. the first image should normally include the title and the first bullet c. the first image should normally include the title and all bullets d. none of the above
Lako Systems is calculating the firm's training costs. While they were able to easily account for the direct costs of the programs, their calculations were somewhat misleading because they left out the indirect costs associated with
A. lost productivity. B. employee travel. C. trainers' salaries. D. meeting site fees.