Question
P8-4B 417: (the following information is the textbook original question) The following represents selected information taken from a companys aging schedule to estimate uncollectible accounts
P8-4B 417: (the following information is the textbook original question)
The following represents selected information taken from a companys aging schedule to estimate uncollectible accounts receivable at year-end.
Instructions
(a) Calculate the total estimated bad debts based on the information on page 417. (b) Prepare the year-end adjusting journal entry to record the bad debts using the allowance method and the aged uncollectible accounts receivable determined in (a). Assume the current balance in Allowance for Doubtful Accounts is a CHF1,600 credit.
(c) Of the above accounts, CHF1,100 is determined to be specifically uncollectible. Prepare the journal entry to write off the uncollectible accounts.
(d) The company subsequently collects CHF700 on a specific account that had previously been determined to be uncollectible in (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection.
(e) Explain how establishing an allowance account satisfies the expense recognition principle.
P8-4B on page 417 (a) through (d), with the following modifications: (this following information is added and modified question, this is required to answers question.)
a) Incorporate GST into the problem. Assume the balances shown on page 417 do not include GST.
b) In (b), the $1,600 credit balance in the Allowance account does not include GST.
c) In (c), the $1,100 does not include GST. The GST portion of a write-off is considered collectible from the taxation authorities.
d) In (d) the $700 cash collected includes GST. Round to two decimal places.
And add the following requirement:
(e) After the adjusting entry in (b) is journalized and posted, show how the accounts receivable should be shown on the balance sheet.
Worksheet.xls Home Insert Page Layout Formulas Data ReviewView fx Number of Days Outstanding 2 Total 0-30 31-60 61-90 91-120 Over 120 4 Accounts receivable CHF383,000 CHF220,000 CHF90,000 CHF40,000 CHF18,000 CHF15,000 5 % uncollectible 6 Estimated bad debts 1% 3% 5% 8% 10%Step by Step Solution
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