Reference no: EM132203707
Alpha co. began its first year of operations on January 1, 2017, The general manager wants to consider wich method to use when accounting for uncollectable accounts. You have been tasked to prepare an analysis based on the following information:
Total Credit Sales $800,000
Total Cash Sales $150,000
Credit Sales Discounts $15,000
Credit Sales Returns $65,000
Cash Sales Returns $5,000
The general manager stated an expectation that of credit sales, 1.5% may result in being uncollectable. The following information relates the FY 2017 unadjusted Trial Balance amount of Accounts Receivable, along with estimated percentages based on an ageing method and balances that consists of:
Days outstanding Amount Estimated Uncollectible
0 - 60 $120,000 1%
61 - 120 $90,000 2%
Over 120 $100,000 6%
If the percent of Accounts Receivable method were to be used, the general manager expects that a total of 3% would be uncollectable.
One of Alpha's clients declared bankruptcy in September and the bookkeeper wrote off that account with a debit to the Allowance for Uncollectible Account and a credit to the Account Receivable for the amount of $500.
Based on the information provided, calculate the following values to be presented to the general manager for FY 2017. Enter whole dollars only.
- Allowance for Uncollectible account Ageing Method
- Bad Debt Expense, Ageing Method
- Allowance for Uncollectible Accounts, Percent of Net Credit Sales Method
- Bad Debt Expense, Percent of Net Credit Sales Method