Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

E 5A Aging Method and Net Sales Method Contrasted LO 2 - Apply the allowance method of accounting for uncollectible accounts. ACCOUNTING CONNECTION During 2014,

E 5A Aging Method and Net Sales Method Contrasted LO 2 - Apply the allowance method of accounting for uncollectible accounts. ACCOUNTING CONNECTION During 2014, DeLuca Company had net sales of $5,700,000. Most of the sales were on credit. At the end of 2014, the balance of Accounts Receivable was $700,000 and Allowance for Uncollectible Accounts had a debit balance of $24,000. DeLuca's management uses two methods of estimating uncollectible accounts expense: the percentage of net sales method and the accounts receivable aging method. The percentage of uncollectible sales is 1.5 percent of net sales, and based on an aging of accounts receivable, the end-of-year uncollectible accounts total $70,000. Prepare the year-end adjusting entry to record the uncollectible accounts expense under each method. What will the balance of Allowance for Uncollectible Accounts be after each adjustment? Why are the results different? Which method is likely to be more reliable? Why?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fraud Analytics Using Descriptive Predictive And Social Network Techniques A Guide To Data Science For Fraud Detection

Authors: Bart Baesens, Veronique Van Vlasselaer, Wouter Verbeke

1st Edition

1119133122, 978-1119133124

More Books

Students also viewed these Accounting questions

Question

How is Karen Slagles argument an example of confirmation bias?

Answered: 1 week ago