On June 30, 2020, Eagle Mountain Party Planners (EMPP) had a 542,000 balance in Accounts Receivable and a $2,600 credit balance in Allowance for Uncollectible Accounts. During July, EMPP made credit sales of $80,000. July collections on account were $61,000, write-offs of uncollectible receivables totalled $1,800, and an account of $700 was recovered. Bad debt expense is estimated to be $8,000. Requirements 1. Determining bad debt expense by using the allowance method is management's estimate of uncollectible accounts and not an accurate measurement. Why not wait until a company finds out which customers can't pay and write the accounts receivable off as they occur? 2. If the allowance method is not used to estimate uncollectible accounts, what effect would this have on accounts receivable (balance sheet) and bad debt expense (income statement)? Requirement 1. Determining bad debt expense by using the allowance method is management's estimate of uncollectible accounts and not an accurate measurement. Why not wait until a company finds out which customers can't pay and write the accounts receivable off as they occur? By using the allowance method, the account is reported at the amount the company expects to collect, which is the most relevant and faithful representation of as of the balance sheet date. Also, are properly recognized in the period in which they were that is in the same period in which the related sales took place. Requirement 2. If the allowance method is not used to estimate uncollectible accounts, what effect would this have on accounts receivable (balance sheet) and bad debt expense (income statement)? (Leave any unused cells blank.) Calculate the company's balance of accounts receivable by entering the beginning balance and the adjusting entries in the following T-account. Post the beginning balance first and then post the adjustments. Accounts Receivable What balance of accounts receivable does EMPP report? SI What amount of bad debt expense would be reported? On June 30, 2020, Eagle Mountain Party Planners (EMPP) had a 542,000 balance in Accounts Receivable and a $2,600 credit balance in Allowance for Uncollectible Accounts. During July, EMPP made credit sales of $80,000. July collections on account were $61,000, write-offs of uncollectible receivables totalled $1,800, and an account of $700 was recovered. Bad debt expense is estimated to be $8,000. Requirements 1. Determining bad debt expense by using the allowance method is management's estimate of uncollectible accounts and not an accurate measurement. Why not wait until a company finds out which customers can't pay and write the accounts receivable off as they occur? 2. If the allowance method is not used to estimate uncollectible accounts, what effect would this have on accounts receivable (balance sheet) and bad debt expense (income statement)? Requirement 1. Determining bad debt expense by using the allowance method is management's estimate of uncollectible accounts and not an accurate measurement. Why not wait until a company finds out which customers can't pay and write the accounts receivable off as they occur? By using the allowance method, the account is reported at the amount the company expects to collect, which is the most relevant and faithful representation of as of the balance sheet date. Also, are properly recognized in the period in which they were that is in the same period in which the related sales took place. Requirement 2. If the allowance method is not used to estimate uncollectible accounts, what effect would this have on accounts receivable (balance sheet) and bad debt expense (income statement)? (Leave any unused cells blank.) Calculate the company's balance of accounts receivable by entering the beginning balance and the adjusting entries in the following T-account. Post the beginning balance first and then post the adjustments. Accounts Receivable What balance of accounts receivable does EMPP report? SI What amount of bad debt expense would be reported
