Age of Customer Debt Amounts owed Estimate of % that (including GST) will not be collected. 1-30 days overdue 14,107.50 5% 31- 180 days overdue 6,204.00 16 % 181 - 365 days overdue 2,458.50 25 %
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Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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- Anis supplies stationery to her customers on credit. Based on previous years’ trends, 2% of her accounts receivable will turn bad. To be prudent, she wants to record this potential loss in her books. Which of the following is the correct journal entry to record this estimate? Select one: a. Debit- Allowance for doubtful debtsCredit- Accounts receivable b. Debit- Allowance for doubtful debtsCredit- Statement of Profit or Loss and Other Comprehensive Income c. Debit- Statement of Profit or Loss and Other Comprehensive IncomeCredit- Allowance for doubtful debts d. Debit- Bad debt expenseCredit- Accounts receivableAron Larson is a customer of Bank Enterprises. Mr. Larson took out a loan in the amount of $120,000 on August 1. On December 31, Bank Enterprises determines the loan to be uncollectible. Larson had not paid anything toward the balance due on account. What is the journal entry recording the bad debt write-off?Minnie has asked you to review the methods Min Armin Wastege uses when dealing with Accounts Receivable. Minnie has compiled the following information for the past 2 months and wants you to update her records on August 31, 2020. On June 30, 2020 the Account Receivable balance for Min Armin Wastege was $13,585 Dr with an Allowance for Doubtful Debts of $462 Cr. In the last two months $4 800 Sales (net of GST) Sales Returns & Allowances (net of GST) 400 Cash Collected 3 550 Bad Debts to be written off (Including GST) 660 The bad debts listed above have not been written off as yet. Minnie has also calculated based on past experience that 7% of net credit sales go bad. All sales are made on credit. REQUIRED: A. Prepare the following General Journal entries to 1. account for the write off of the bad debt during the past two months 2. the adjusting entry on August 31 using the information Minnie has provided В. Update the Accounts Receivable and Allowance for doubtful debts accounts using…
- Good day, please may you help me with accounting debtors journal and allowances on Nerina traders a gift shop situated in Illovo. debtors journal headings day,details,debtors controloutput vat,sales debtors allowances headings day,debtors control,input vat ,sales returnMinnie has asked you to review the methods Min Armin Wastege uses when dealing with Accounts Receivable. Minnie has compiled the following information for the past 2 months andwants you to update her records on August 31, 2020.On June 30, 2020 the Account Receivable balance for Min Armin Wastege was $13,585 Dr withan Allowance for Doubtful Debts of $462 Cr. In the last two monthsSales (net of GST)S4 800Sales Returns & Allowances (net of GST) 400Cash Collected3 550Bad Debts to be written off (Including GST) 660The bad debts listed above have not been written off as yet. Minnie has also calculated based on past experience that 7% of net credit sales go bad. All sales are made on credit. REQUIRED:Prepare the following General Journal entries to1. account for the write off of the bad debt during the past two months2. the adjusting entry on August 31 using the information Minnie has provided. b. Update the Accounts Receivable and Allowance for doubtful debts accounts.As the accountant for Clean Air Controls, you attend a meeting with the sales managers to discuss credit policies. At the meeting, you report that bad debts expense for the year is estimated to be $85,000 and account receivables at year end is $1,500,000 less a $57,000 allowance for doubtful accounts. Arthur Levitt, a sales manager, asks why bad debts expense and the allowance are not the same amount. Required 1. Write a professional email explaining this concept to Arthur. The company estimates bad debts expense as 3% of sales.
- PROBLEM RECOGNITION TASK Determine the maximum deposit insurance coverage by PDIC in the following items. 3. Jessa Manucdoc has the following deposit accounts in a closed bank: Jessa Manucdoc’s modeling business (sole proprietorship) P300,000 Jessa Manucdoc P400,000 Jessa Manucdoc and Elmira Gersaniva P900,000 Jessa Manucdoc and Francia Cabezudo P500,000 What is the maximum deposit insurance coverage as far as Jessa is concerned?Which one of the following statements concerning bad debt expenses is correct? Select one: a. When you write off an accounts receivable, you debit bad debt expense and credit accounts receivable. b. You record bad debt expense when individual accounts receivable becomes uncollectible. c. Under the percentage of receivables method, bad debt expense is the year-end receivables multiplied by the % of uncollectible accounts. d. When the allowance method is used, bad debt expense is recorded before the accounts are written off.When would you consider a customer debt an uncollectible receivable? A. The debt is older than one year. B. You've been unable to contact them to collect. C. The debt is associated with a non-inventory item. D. You need to match income with expenses.
- You have just received notice that a customer of yours with an account receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to debit Allowance for Doubtful Accounts and credit Bad Debt Expense. debit Bad Debt Expense and credit Allowance for Doubtful Accounts. debit Allowance for Doubtful Accounts and credit Accounts Receivable. debit Bad Debt Expense and credit Accounts Receivable.I am having issues understading what needs to happen with this question, please help, so fart this is how I understand it but it is a bit confusing. December 31, 2018 Debit Credit Account Receivable $ 130,000.00 Bad Debt Expense(Est Uncollectible for new period $26,000 - Previous Bad Debt 2,100 (debit) $ 23,900.00 Allowance for Uncollectible Accounts (Establish an allowance for future bad debts) ($130,000 x 20% = $26,000) - Debit of $2,100 $ 23,900.00 Thank youWhen a customer is delinquent on paying a notes receivable, your company has the option to continue to attempt collection or sell the debt to a collection agency. Research the benefits and challenges with each of these options and in a short essay, answer the following questions. A. What are the benefits and challenges of continuing to attempt collection yourself? B. What are the benefits and challenges of selling debt to a collection agency? C. If you had a dishonored notes receivable, which option would you select and why? D. Would you weight certain benefits or challenges differently when making your selection? How?