Question
CL Co. manufactures and sells plumbing fixtures for homes & businesses. All of its sales are made on credit to wholesale distributors. Information for CL
CL Co. manufactures and sells plumbing fixtures for homes & businesses. All of its sales are made on credit to wholesale distributors. Information for CL Co. for the current year is as follows:
Assume that CL Co. estimates its bad debts based on an aging analysis of its year-end accounts receivable, which indicates that a provision for uncollectible accounts of $34,000 is required: If there is a debit balance of $5,900 in its allowance for doubtful accounts on December 31, before adjustment,
i. | What amount will the company report on its income statement as bad debts expense? |
ii. | What amount will it report on its balance sheet as the net value of its accounts receivable? |
Assume that CL Co. estimates its bad debts based on an aging analysis of its year-end accounts receivable, which indicates that a provision for uncollectible accounts of $34,000 is required: If there is a $5,900 credit balance in the allowance for doubtful accounts on December31, before adjustment,
i. | What amount will the company report on its income statement as bad debts expense? |
ii. | What amount will it report on its balance sheet as the net value of its accounts receivable? |
For this next part assume instead that CL Co. estimates its bad debts expense at 7% of credit sales: If there is a debit balance of $5,900 in its allowance for doubtful accounts on December 31, before adjustment,
i. | What amount will the company report on its income statement as bad debts expense? |
ii. | What amount will it report on its balance sheet as the net value of its accounts receivable? |
For this next part assume instead that CL Co. estimates its bad debts expense at 7% of credit sales: If there is a $5,900 credit balance in the allowance for doubtful accounts on December 31, before adjustment,
i. | What amount will the company report on its income statement as bad debts expense? |
ii. | What amount will it report on its balance sheet as the net value of its accounts receivable? |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started