Question
Allowance Method for Accounting for Bad Debts At the beginning of 2017, EZ Tech Company's Accounts Receivable balance was $130,000, and the balance in Allowance
Allowance Method for Accounting for Bad Debts
At the beginning of 2017, EZ Tech Company's Accounts Receivable balance was $130,000, and the balance in Allowance for Doubtful Accounts was $2,200. EZ Tech's sales in 2017 were $980,000, 80% of which were on credit. Collections on account during the year were $620,000. The company wrote off $4,000 of uncollectible accounts during the year.
Required:
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | ||||||
| fill in the blank 34906300404cffd_2 | fill in the blank 34906300404cffd_4 | fill in the blank 34906300404cffd_5 | fill in the blank 34906300404cffd_7 | fill in the blank 34906300404cffd_9 | fill in the blank 34906300404cffd_10 | |||||||||
| fill in the blank 34906300404cffd_12 | fill in the blank 34906300404cffd_14 | fill in the blank 34906300404cffd_15 | fill in the blank 34906300404cffd_17 | fill in the blank 34906300404cffd_19 | fill in the blank 34906300404cffd_20 | |||||||||
Identify and analyze the transactions related to the collections of cash during 2017.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | ||||||
| fill in the blank ca7d02042006fc5_2 | fill in the blank ca7d02042006fc5_4 | fill in the blank ca7d02042006fc5_5 | fill in the blank ca7d02042006fc5_7 | fill in the blank ca7d02042006fc5_9 | fill in the blank ca7d02042006fc5_10 | |||||||||
| fill in the blank ca7d02042006fc5_12 | fill in the blank ca7d02042006fc5_14 | fill in the blank ca7d02042006fc5_15 | fill in the blank ca7d02042006fc5_17 | fill in the blank ca7d02042006fc5_19 | fill in the blank ca7d02042006fc5_20 | |||||||||
Identify and analyze the transactions related to the write-offs of accounts receivable during 2017.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. If a contra account is decreased, it will have the effect of increasing the corresponding financial statement item.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | ||||||
| fill in the blank 48a1f3f5cfb7fa9_2 | fill in the blank 48a1f3f5cfb7fa9_4 | fill in the blank 48a1f3f5cfb7fa9_5 | fill in the blank 48a1f3f5cfb7fa9_7 | fill in the blank 48a1f3f5cfb7fa9_9 | fill in the blank 48a1f3f5cfb7fa9_10 | |||||||||
| fill in the blank 48a1f3f5cfb7fa9_12 | fill in the blank 48a1f3f5cfb7fa9_14 | fill in the blank 48a1f3f5cfb7fa9_15 | fill in the blank 48a1f3f5cfb7fa9_17 | fill in the blank 48a1f3f5cfb7fa9_19 | fill in the blank 48a1f3f5cfb7fa9_20 | |||||||||
2. Identify and analyze the adjustments to recognize bad debts assuming that (a) bad debts expense is 3% of credit sales and (b) amounts expected to be uncollectible are 5% of the year-end accounts receivable.
a. Identify and analyze the adjustments to recognize bad debts assuming that bad debts expense is 3% of credit sales.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. If a contra account is decreased, it will have the effect of increasing the corresponding financial statement item.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | ||||||
| fill in the blank 58e855f3003ffc9_2 | fill in the blank 58e855f3003ffc9_4 | fill in the blank 58e855f3003ffc9_5 | fill in the blank 58e855f3003ffc9_7 | fill in the blank 58e855f3003ffc9_9 | fill in the blank 58e855f3003ffc9_10 | |||||||||
b. Identify and analyze the adjustments to recognize bad debts assuming that amounts expected to be uncollectible are 5% of the year-end accounts receivable.
| Activity | |
| Accounts | |
| Statement(s) |
How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Remember: if a contra account is increased, it will have the effect of decreasing the corresponding financial statement item. If a contra account is decreased, it will have the effect of increasing the corresponding financial statement item.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | Expenses | = | Income | ||||||
| fill in the blank ecd041f77ff3044_2 | fill in the blank ecd041f77ff3044_4 | fill in the blank ecd041f77ff3044_5 | fill in the blank ecd041f77ff3044_7 | fill in the blank ecd041f77ff3044_9 | fill in the blank ecd041f77ff3044_10 | |||||||||
3. What is the net realizable value of accounts receivable on December 31, 2017, under each assumption in part (2)?
Using the percentage of sales approach, the net realizable value of the receivables is? $fill in the blank 7292980b102cf8d_1
Using the percentage of year-end receivables approach, the net realizable value of the receivables is? $fill in the blank 7292980b102cf8d_2
4. The recognition of bad debts expense the net realizable value by the amount recorded in bad debts expense and the . The write-off of accounts the net realizable value.
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Financial Accounting A Focus On Interpretation And Analysis
Authors: Richard F Kochanek, A Douglas Hillman
7th Edition
1111061750, 9781111061753
