146.A partially competed aging of receivables schedule for Lindy Designs’ is shown below. Calculate the amount that isestimated to be uncollectible.
a)Determine the amount estimated to be uncollectible by completing the aging of receivables schedule. Roundcalculations to the nearest dollar.
|
Est. UncollectibleAccounts
|
Age Interval
|
Balance
|
Percentage
|
Amount
|
Not past due
|
550,000
|
2.50%
|
|
1~30 days past due
|
96,500
|
4.00%
|
|
31~60 days past due
|
43,750
|
9.50%
|
|
61~90 days past due
|
22,250
|
16.00%
|
|
91~180 days past due
|
5,600
|
31.00%
|
|
181~365 days past due
|
3,100
|
60.00%
|
|
Over 365 days past due
|
1,250
|
95.00%
|
|
Total
|
722,450
|
|
|
|
|
|
|
b)If the Allowance for Doubtful Accounts has a credit balance of $9,700, record the adjusting entry for
the baddebt expense for the year.
c)If the Allowance for Doubtful Accounts has a debit balance of $9,700, record the adjusting entry for the baddebt expense for the year.
147.Discuss the (1) focus and (2) financial statement emphasis of (a) the percent of sales and (b) the analysis ofreceivables methods of estimating bad debts.
148.Morry Company wrote off the following accounts receivable as uncollectible for the first year of its operationsending December 31:
Required:
Customer
|
Amount
|
J. Jackson
|
$10,000
|
L. Stanton
|
9,500
|
C. Barton
|
13,100
|
S. Fenton
|
2,400
|
Total
|
$35,000
|
(1)Journalize the write-offs for the current year under the direct write-off method.
(2)Journalize the write-offs for the current year under the allowance method. Also,journalize the adjusting entry for uncollectible receivables assuming the company made$2,400,000 of credit sales during the year and the industry average for uncollectiblereceivables is 1.50% of credit sales.
(3)How much higher or lower would Morry Company’s net income have been under thedirect write-off method than under the allowance method?
149.Fellows Corporation has determined that the $2,700 accounts receivable due from Andrew Stevens isuncollectible. Compare the journal entry that is required under the direct write-off method to the journal entry thatis required using the allowance method.