excercise 7-1,7-2,7-4

ear i pess income is $LS, 00 excrusive fo an Prcsident a the Compan has asked you to calculatc net incon altmatives of acccunning for bad dcbis Ine Direct wnte off methodl and allocance method. The pres idenr woid like to usc cr each w thgt will resultinthe hight net incog So tar na adjustments have been unco chole accounts or TD madc tount esnmatc bad debts. Oata esented fercontac at net credit salts that ull betblet ok at Exercises Exercise 7-2 Allowance Method of Accounting for Bad Debts- Comparison of the Two Approaches Kandel Company had the following data available for 2017 (before making any adjustments) L01 Accounts receivable, 12/31/17 Allowance for doubtful accounts Net credt sales, 2017 $320,100 2,600 Required 1. Identify and analyze the adjustment to recognize bad debts under the followving asumptions (a) bad debts expense is expected to expects it will not be able to collect 6% of the balance in accounts receivable at , Assume instead that the balance in the affect your answers to part (1)? 90 be 2% of net credit sales for the year and (b) Kandel 2. account is a negative $2,600. How will this Exercise 7-3 Working Backward: Allowance for Doubtful AccountsLO1 Olson Corp. reported the following in the Current Assets section of its December 31, 2017, EXAMPLE 7-2 balance sheet: 12/31/17 $5,000 and $3,000, respectively $48000 During 2017, Olson recorded $80,000 of sales on credit and wrote off $4,000 of uncollectible accounts Required Determine the anniunt ofcash collected during 2017 from sales on credit 2. Determine the amount of bad debes expense for 2017 Exercise 7-4 Using an Aging Schedule to Account for Bad Debts Carter Company the year that are not overdue, there is a 90s down to 70%. The probability of( due is estimated to bc 25%. sells on credit with terms of n/30. For the $500,000 of accounts at the end of that are less than a sclusive of amy adjust the amount of 1. Prepare an aging schedule to estinate a ths basis of the schedule in part (),identity and 12/31/17 12/31/16 Accounts receivable, net of allowances of $5,000 and $3,000, respectively $54,000 $48,000 During 2017, Olson recorded $80,000 of sales on credit and wrote off $4,000 of uncollectible accounts Required 1. Determine the amount of cash collected during 2017 from sales on credit. 2. Determine the amount of bad debts expense for 2017. Exercise 7-4 Using an Aging Schedule to Account for Bad Debts Carter Company sells on credit with terms of n/30. For the $500,000 of accounts at the end of the year that are not overdue, there is a 90% probability of collection. For the $200,000 of accounts that are less than a month past due, Carter estimates the likelihood of collection going down to 70%. The probability of collecting the $100,000 of accounts more than a month past due is estimated to be 25%. Required 1. Prepare an aging schedule to estimate the amount of uncollectible accounts. 2. On the basis of the schedule in part (1), identify and analyze the adjustment needed to estimate bad debts. Assume that the balance in Allowance for Doubtful Accounts is $20,000. Exercise 7-5 Accounts Receivable Turnover for Nike The financial statements included in the 2015 Form 10-K of Nike reported the following EX amounts (in millions of dollars) LO Revenues, for the year ended May 31, 2015 Accounts receivable, net, May 31, 2015 Accounts receivable, net, May 31, 2014 $30,601 3,358 REAL W Required 1, Comp ute Nike's accounts receivable turnover ratio for the year ended May 31, 2015. ll alrs ar oncredit.) ble? Enlain your answei