Question
At the beginning of 2017, EZ Tech Company's Accounts Receivable balance was $176,000, and the balance in Allowance for Doubtful Accounts was $3,000. EZ Tech's
At the beginning of 2017, EZ Tech Company's Accounts Receivable balance was $176,000, and the balance in Allowance for Doubtful Accounts was $3,000. EZ Tech's sales in 2017 were $1,320,000, 80% of which were on credit. Collections on account during the year were $840,000. The company wrote off $5,000 of uncollectible accounts during the year.
Required:
1. Identify and analyze the sales during 2017.
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.
| Net | ||||||||||||||
| = | Income | |||||||||||||
| fill in the blank 69915808503f05f_9 | fill in the blank 69915808503f05f_10 | |||||||||||||
| fill in the blank 69915808503f05f_19 | fill in the blank 69915808503f05f_20 | |||||||||||||
Identify and analyze the transactions related to the collections of cash during 2017.
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.
Identify and analyze the transactions related to the write-offs of accounts receivable during 20
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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 | ||||||
| Accounts PayableAllowance for Doubtful AccountsBad Debts ExpenseCashNotes ReceivableNo Entry | fill in the blank db26f9065072fae_2 | Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debts ExpenseNotes PayableNo Entry | fill in the blank db26f9065072fae_4 | fill in the blank db26f9065072fae_5 | Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debts ExpenseNotes PayableNo Entry | fill in the blank db26f9065072fae_7 | Accounts PayableAllowance for Doubtful AccountsBad Debts ExpenseCashNotes ReceivableNo Entry | fill in the blank db26f9065072fae_9 | fill in the blank db26f9065072fae_10 | |||||
| Accounts PayableAccounts ReceivableBad Debts ExpenseCashNotes ReceivableNo Entry | fill in the blank db26f9065072fae_12 | Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debts ExpenseNotes PayableNo Entry | fill in the blank db26f9065072fae_14 | fill in the blank db26f9065072fae_15 | Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debts ExpenseNotes PayableNo Entry | fill in the blank db26f9065072fae_17 | Accounts PayableAllowance for Doubtful AccountsBad Debts ExpenseCashNotes ReceivableNo Entry | fill in the blank db26f9065072fae_19 | fill in the blank db26f9065072fae_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 7% 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.
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 | ||||||
| Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debts ExpenseCashNo Entry | fill in the blank 87301efabfce06b_2 | Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debts ExpenseNotes PayableNo Entry | fill in the blank 87301efabfce06b_4 | fill in the blank 87301efabfce06b_5 | Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debts ExpenseNotes PayableNo Entry | fill in the blank 87301efabfce06b_7 | Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debts ExpenseCashNo Entry | fill in the blank 87301efabfce06b_9 | fill in the blank 87301efabfce06b_10 | |||||
b. Identify and analyze the adjustments to recognize bad debts assuming that amounts expected to be uncollectible are 7% of the year-end accounts receivable.
| Activity | OperatingInvestingFinancing |
| Accounts | Allowance for Doubtful Accounts Increase, Bad Debts Expense IncreaseAllowance for Doubtful Accounts Increase, Bad Debts Expense DecreaseAllowance for Doubtful Accounts Decrease, Bad Debts Expense IncreaseAllowance for Doubtful Accounts Decrease, Bad Debts Expense Decrease |
| Statement(s) | Balance Sheet onlyIncome Statement onlyBalance Sheet and Income Statement |
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 | ||||||
| Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debts ExpenseCashNo Entry | fill in the blank 1dd79d069fc705c_2 | Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debts ExpenseNotes PayableNo Entry | fill in the blank 1dd79d069fc705c_4 | fill in the blank 1dd79d069fc705c_5 | Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debts ExpenseNotes PayableNo Entry | fill in the blank 1dd79d069fc705c_7 | Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debts ExpenseCashNo Entry | fill in the blank 1dd79d069fc705c_9 | fill in the blank 1dd79d069fc705c_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?
Using the percentage of year-end receivables approach, the net realizable value of the receivables is?
4. The recognition of bad debts expense
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Financial Accounting
Authors: Robert Libby, Patricia Libby, Daniel G Short, George Kanaan, Maureen Sterling
6th Canadian edition
73208140, 1259105695, 978-1259105692
