formation related to Lady Gangster Ltd. For 2021 is summarized below: Total credit sales L5,000,00 Accounts receivable at December 31 1,750,000 Bad debts written off 66,000 Required: c. Assume the same facts as in (b), except there is a L6,000 debit balance in Allowance for Doubtful Accounts. What amount of bad debts expense will Lady Gangster record?

formation related to Lady Gangster Ltd. For 2021 is summarized below: Total credit sales L5,000,00 Accounts receivable at December 31 1,750,000 Bad debts written off 66,000 Required: c. Assume the same facts as in (b), except there is a L6,000 debit balance in Allowance for Doubtful Accounts. What amount of bad debts expense will Lady Gangster record?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 7RE: McKinney Co. estimates its uncollectible accounts as a percentage of credit sales. McKinney made...

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Clovis Enterprises reports $845,500 in credit sales for 2018 and $933,000 in 2019. It has a $758,000 accounts receivable balance at the end of 2018 and $841,000 at the end of 2019. Clovis uses the income statement method to record bad debt estimation at 4% during 2018. To manage earnings more favorably, Clovis changes bad debt estimation to the balance sheet method at 5% during 2019. A. Determine the bad debt estimation for 2018. B. Determine the bad debt estimation for 2019. C. Describe a benefit to Clovis Enterprises in 2019 as a result of its earnings management.
Michelle Company reports $345,000 in credit sales and $267,500 in accounts receivable at the end of 2019. Michelle currently uses the income statement method to record bad debt estimation at 4%. To manage earnings more efficiently, Michelle changes bed debt estimation to the balance sheet method at 4%. How much is the difference in net income between the income statement and balance sheet methods? A. $3,100 B. $13,800 C. $10,700 D. $77,500
Jars Plus recorded $861,430 in credit sales for the year and $488,000 in accounts receivable. The uncollectible percentage is 2.3% for the income statement method, and 3.6% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $10,220, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $5,470, record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
McKinney Co. estimates its uncollectible accounts as a percentage of credit sales. McKinney made credit sales of 1,500,000 in 2019. McKinney estimates 2.5% of its sales will be uncollectible. Prepare the journal entry to record bad debt expense for McKinney at the end of 2019.
Fortune Accounting reports $1,455,000 in credit sales for 2018 and $1,678,430 in 2019. It has an $825,000 accounts receivable balance at the end of 2018 and $756,000 at the end of 2019. Fortune uses the balance sheet method to record bad debt estimation at 7.5% during 2018. To manage earnings more favorably, Fortune changes bad debt estimation to the income statement method at 5.5% during 2019. A. Determine the bad debt estimation for 2018. B. Determine the bad debt estimation for 2019. C. Describe a benefit to Fortune in 2019 as a result of its earnings management.
Estimating Bad Debts from Receivables Balances The following information is extracted from Shelton Corporations accounting records at the beginning of 2019: During 2019, sales on credit amounted to 575,000, 557,400 was collected on outstanding receivables and 2,600 of receivables were written off as uncollectible. On December 31, 2019, Shell on estimastes its bad debts to be 4% of the outstanding gross accounts receivable balance. Required: 1. Prepare the journal entry necessary to record Sheltons estimate of bad debt expense for 2019. 2. Prepare the Accounts Receivable section of Shelton's December 31, 2019, balance sheet. 3. Compute Shelton's receivables turnover. (Round to one decimal place.) 4. It Sheldon uses IFRS, what might be the heading for the accounts receivable section in Requirement 2?
Ink Records recorded $2,333,898 in credit sales for the year and $1,466,990 in accounts receivable. The uncollectible percentage is 3% for the income statement method and 5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $20,254; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Funnel Direct recorded $1,345,780 in credit sales for the year and $695,455 in accounts receivable. The uncollectible percentage is 4.4% for the income statement method and 4% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $13,888; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Angelos Outlet used to report bad debt using the balance sheet method and is now switching to the income statement method. The percentage uncollectible will remain constant at 5%. Credit sales figures for 2019 were $866,000, and accounts receivable was $732,000. How much will Angelos Outlet report for 2019 bad debt estimation under the income statement method?
Average Uncollectible Account Losses and Bad Debt Expense The accountant for Porile Company prepared the following data for sales and losses from uncollectible accounts: Required: 1. Calculate the average percentage of losses from uncollectible accounts for 2015 through 2018. 2. Assume that the credit sales for 2019 are $1,260,000 and that the weighted average percentage calculated in Requirement 1 is used as an estimate of loses from uncollectible accounts for 2019 credit sales. Determine the bad debt expense for 2019 using the percentage of credit sales method. 3. CONCEPTUAL CONNECTION Do you believe this estimate of bad debt expense is reasonable? 4. CONCEPTUAL CONNECTION How would you estimate 2019 bad debt expense if losses from uncollectible accounts for 2018 were What other action would management consider?
Aerospace Electronics reports $567,000 in credit sales for 2018 and $632,500 in 2019. They have a $499,000 accounts receivable balance at the end of 2018, and $600,000 at the end of 2019. Aerospace uses the income statement method to record bad debt estimation at 5% during 2018. To manage earnings more favorably, Aerospace changes bad debt estimation to the balance sheet method at 7% during 2019. A. Determine the bad debt estimation for 2018. B. Determine the bad debt estimation for 2019. C. Describe a benefit to Aerospace Electronics in 2019 as a result of its earnings management.
Dortmund Stockyard reports $896,000 in credit sales for 2018 and $802,670 in 2019. It has a $675,000 accounts receivable balance at the end of 2018, and $682,000 at the end of 2019. Dortmund uses the balance sheet method to record bad debt estimation at 8% during 2018. To manage earnings more favorably, Dortmund changes bad debt estimation to the income statement method at 6% during 2019. A. Determine the bad debt estimation for 2018. B. Determine the bad debt estimation for 2019. C. Describe a benefit to Dortmund Stockyard in 2019 as a result of its earnings management.