Journalize the year-end adjusting entry for bad debts on the basis of the aging schedule. Show the T-account for the Allowance for Bad Debts at December 31, 2018.
At December 31, 2018, the Accounts Receivable balance of Digital Cable Company is $205,000. The Allowance for Bad Debts account has a $20,610 debit balance. Digital Cable Compa receivable: B (Click the icon to view the aging schedule.) Read the requirements. Requirement 1. Journalize the year-end adjusting entry for bad debts on the basis of the aging schedule. Show the T-account for the Allowance for Bad Debts at December 31, 2018. Begin by determining the target balance of Allowance for Bad Debts by using the age of each account. Age of Accounts 1-30 31-60 61-90 Total Over 90 Days Days Days Days Balance Accounts Receivable $ 60,000 0.6 % $ 65,000 5.0 $ 50,000 10.0% 30,000 45.0 % Estimated percent uncollectible Estimated total uncollectible Data Table Age of Accounts Accounts Receivable Estimated percent uncollectible 1-30 Days 31-60 Days 61-90 Days Over 90 Days 00 $ 65,000 $ 50,000 $ 30,000 0.6% 5.0% 10.0% 45.0% Print Done Done Journalize all entries required for Fast Cat Running Shoes. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) X Feb. 2, 2018: Recorded credit sales of $102,000. Ignore Cost of Goods Sold. i More Info Date Accounts and Explanation Debit Credit 2018 Feb. 2. 2018 Feb. 2 Nov. Recorded credit sales of $102,000. Ignore Cost of Goods Sold. Loaned $15,000 to Jean Phillip, an executive with the company, on a one-year, 14% note. Accrued interest revenue on the Phillip note. Dec. 31 2019 Nov. Collected the maturity value of the Phillip note. Requirement 1. Calculate Cherokee's acid-lest ratio for 2018. (Round to two decimals.) Determine whether Cherokee's acid-test ratio improved or deteriorated from 2017 to 2018. How does Cherokee's acid-test ratio compare with the industry average of 0.80? (Abbreviations used: Cash = Cash including cash equivalents; ST invest. = short-term investments. Round the acid test ratio to two decimals, X.XX.) Calculate the acid-test ratio for both years. = Acid-test ratio Data Table 2018 / 2017 2018 2017 i Requirements Balance sheet-partial Current Assets: Cash Short-term Investments Accounts Receivable $ 4,000 $ 10,000 24.000 13,000 $ 60,000 (10,000) S 73,000 50.000 (9,000) Less: Allowance for Bad Debts 64,000 1. Calculate Cherokee's acid-test ratio for 2018. (Round to two decimals.) Determine whether Cherokee's acid-test ratio improved or deteriorated from 2017 to 2018. How does Cherokee's acid-test ratio compare with the industry average of 0.80? 2. Calculate Cherokee's accounts receivable turnover ratio. (Round to two decimals.) How does Cherokee's ratio compare to the industry average accounts receivable tumover of 10? 3. Calculate the days' sales in receivables for 2018. (Round to the nearest day.) How do the results compare with Cherokee's credit terms of net 30? Merchandise Inventory 193.000 6,500 189,000 6,500 277,500 282,500 Prepaid Insurance Total Current Assets Total Current Liabilities Income statement-partial Net Sales (all on account) 113.000 115,000 Print Done 644.100 731,000 Print Done Innovative Media Sign Incorporated sells on account. Recently, Innovative reported the following figures: 2018 2017 Net Credit Sales $ 536,130 $ 600,500 Net Receivables at end of year 38,600 39,100 Read the requirements. Requirement 1. Compute Innovative's days' sales in receivables for 2018. (Round to the nearest day.) First calculate the accounts receivable turnover. (Abbreviations used: AR turn = accounts receivable turnover ratio; Cash = Cash inclu two decimals, X.XX.) AR turn 2018 Il X Requirements 1. 2. Compute Innovative's days' sales in receivables for 2018. (Round to the nearest day.) Suppose Innovative's normal credit terms for a sale on account are 2/10, net 30. How well does Innovative's collection period compare to the company's credit terms? Is this good or bad for Innovative
