Problem 2 (11 points)

The Accounts Receivable balance for Bach Consulting is $4,400,000 as of May 31, 2020. Before calculating and recording the months bad debt expense, there is a credit balance in the Allowance for Doubtful Accounts of $80,000. The May 2020 net sales were $30,000,000. In the past several years, 1% of net sales have proven uncollectible. An aging of accounts receivable results in a $360,000 estimate for the Allowance for Doubtful Accounts as of May 31, 2020.

PART A: PERCENT OF SALES METHOD

Assume that Bach Consulting uses the percent of sales method to estimate future uncollectible accounts.

• What adjusting entry does Bach make to record May 2020 Bad Debt Expense?

• What is Accounts Receivable, net on Bachs May 31, 2018 Balance Sheet? $___________

• What is Bad Debt Expense on Bachs May 2020 Income Statement? $___________

PART B: ANALYSIS OF RECEIVABLES METHOD

Assume that Bach Consulting instead uses the analysis of receivables method to estimate future uncollectible accounts.

• What adjusting entry does Bach make to record May 2020 Bad Debt Expense?

• What is Accounts Receivable, net on Bachs May 31, 2018 Balance Sheet? $___________

• What is Bad Debt Expense on Bachs May 2020 Income Statement? $___________

Problem 3 (13 points)

Use PVH Corp.s financial statement information to answer the following questions.

1. Provide the following account balances for PVH (4 points):

	February 2, 2020	February 3, 2019
Accounts Receivable (gross)
Allowance for Doubtful Accounts
Accounts Receivable, net

2. Which of the above numbers represents the amount of its February 2, 2020 Accounts Receivable balance that PVH expects to collect in the subsequent year(s)? (1 point)

3. Which of the above numbers represents that amount that PVH believes it will not collect from its customers as of February 2, 2020? (1 point)

4. Which of the above numbers represents the total amount PVH is owed by customers as of February 2, 2020? (1 point)

5. Provide the journal entry (both accounts and amounts) that PVH must have made to record its estimate of Bad Debt Expense in fiscal year 2019. (3 points)

6. Provide the journal entry (both accounts and amounts) that PVH must have made to record Accounts Receivable writeoffs in fiscal year 2019. (3 points)