Answered step by step
Verified Expert Solution
Question
00
1 Approved Answer
What are the working and methods to find answers to the below questions? Assignment on Accounts Receivable Pine Inc. sells industrial products to lumber manufacturers
What are the working and methods to find answers to the below questions?
Assignment on Accounts Receivable Pine Inc. sells industrial products to lumber manufacturers throughout British Columbia. The company's credit policy for established customers requires invoices to be paid within thirty days of product delivery. For newer customers, Pine requires all sales to be cash upon delivery. The company has a fiscal year-end of December 31st. The following information is available for the company's 2020 fiscal year: Accounts receivable Allowance for doubtful accounts (credit balance) Total sales (90% on credit) Collections of accounts receivable Write-off of customer accounts in 2020 $1,400,000 $42,000 $8,100,000 $7,200,000 $48,000 During the year, company estimated and recorded bad debt expense as 1.00% of credit sales. The final amount of bad debt expense for the year will be determined using an aging analysis. The company estimates the uncollectible amount of year-end accounts receivable could be estimated using the following aging schedule: . 1- 30 days old 5% 31 60 days old 15% 61-90 days old 30% Over 90 days 50% . At the end of 2020, 50% of gross receivables are 1 - 30 days old, 30% are 31 60 days old, 15% are 61- 90 days old and 5% are greater than 90 days old. Required: 1. Provide all summary journal entries to record the transactions affecting accounts receivable and the allowance for doubtful accounts for 2020. (10 marks) 2. Determine the balance of gross accounts receivable as at December 31, 2020. (5 marks) 3. Calculate the 2020 year-end balances for bad debt expense and allowance for doubtful accounts assuming Pine adopts the aging method. (5 marks) 4. Using the information presented below, as well as your answer to parts (1) and (2), comment on Pine's management of its accounts receivable in 2020. Be sure to include any calculations to support your comments. Credit sales in 2019 were $4,375,000. At December 31, 2018, the balance of accounts receivable was $290,000 and the balance of allowance for doubtful accounts was $20,000Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started