Question
alpha company began its first year of operations on january 1, 2017 the general manger wants to consider which methods to use when accounting for
alpha company began its first year of operations on january 1, 2017 the general manger wants to consider which methods to use when accounting for uncollectible accounts. you have been tasked to prepared an analysis based on the following information
total credit sales $800,000
total cash sales $150,000
credit sale discount $15,000
credit sales returns $65,000
cash sales returns $5,000
the general manager states an expectation that of credit sales, 1.2% may result in being uncollectible. the following relates the FY 2017 unadjusted trial balance amount of accounts receivable along with estimated percentages based on an aging method and balances that consists of:
days outstanding amount estimated uncollectible
0-60 $120,000 1%
61-120 90,000 2%
over 120 100,000 5%
if the percent of account receivable method were to be used the general manager expects that a total of 3% would be uncollectible
one of alpha clients declared bankruptcy in sept and the bookkeeper wrote off that account with debit to the allowance for uncollectible account and a credit to the account receivable for the amount of $500.
calculate the values for FY2017
1 allowance for uncollectible accounts aging method
2 bad debts expense, aging method
3 allowance for uncollectible accounts, percent of net credit sales method
4 bad debts expense, percent of net credit sales method
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