Calculate the bad debt estimation, Cost Accounting

Q. 1. The 31st December 2009 trial balance of Anika Co. reported the following information.

Dr. Cr. Allowance for Bad Debts........................... $1,300 During the year 2010 the following selected transactions are available:

5 January 2010 Anika wrote off the balance due from Michael as a bad debt amounted to $2,000. 19 April Peter was unable to pay his account balance of $1,500. He accepted $1,500 10% bill to settle his obligation with Anika on 30th June.

30 June Anika collected the bill in full amount on due that with the interest.

31 December Anika uses allowance method to estimate bad debt expense at 2% using income statement approach. During the year ended 2010 Anika made total net sales of $100,000 (of which 90% credit).

31 December Anika had an Accounts Receivable Balance of $44,000

Required:

a. Create a worksheet in your excel file and name it "Part A Q2". In column A to E set up general journal and input the necessary journal entries to record the transactions and events listed above. Explanations (narrations) for your journal entries are required. Copy it to the word document. Clearly show all supporting calculations in the columns to the right of the journal entries. Leave column G empty and input the heading "Calculations area:" in cell H2. Perform all calculations in this area of the worksheet. Show the calculations in narrative form in the cell next to the cell containing the formula (e.g. "(=$20,000*0.08=$1,600)"). Calculations should be rounded to the nearest cent (i.e. to two decimal places). Copy all the calculations to the word document.

b. Based on the transaction on 5  January 2010, do you think that the bad debt estimation was correct in 2009?  Record your answer in word file.

c. In the rows below your journal, create a running balance ledger account. Prepare the account for Allowance for Bad Debts. To arrive at closing you must use the formula and these formulae will be checked. Copy it to the word document.

d.  What closing balance of Allowance for Bad Debts you have arrived at? Is this balance equal to 2% of net credit sales? Why or why not? Give explanations. Record your answer in word document.

e.  In the rows below the running balance ledger account, provide an extract from the balance sheet for the end of December 2010, showing how the assets from the transactions above would be reported under the Current Assets heading in the balance sheet. Copy it to the word document.

Posted Date: 3/13/2013 5:21:24 AM | Location : United States







Related Discussions:- Calculate the bad debt estimation, Assignment Help, Ask Question on Calculate the bad debt estimation, Get Answer, Expert's Help, Calculate the bad debt estimation Discussions

Write discussion on Calculate the bad debt estimation
Your posts are moderated
Related Questions
Total profit means the total revenue excluding the total cost of the certain products. Average profit defines the profit which comes and achieved after selling each unit. Total

If fixed costs are $743,122 and variable costs are 69% of sales, what is the break-even point in sales dollars? Select the correct answer. A. $512,754 B. $2,397,168 C. $1,255,876 D

A company is considering the following alternatives: Alternative 1 Alternative 2 Revenues $240,000 240,000 Variable costs 120,000 140,000 Fixed costs 70,000 70,000 Which of the fol

Your organization (City Rehab) has been approached by an MCO looking for an exclusive arrangement for the rehabilitation of its hip replacement patients. The MCO is aggressively po


G. Mills was appointed a local agent for the High Power Mobile Workshop Bolt (HPMW-B) on 1 April 2009. The HPMW-B is manufactured by Mobile Equipment Ltd (MEL). The company charges

Advantages of Standard Costing 1. Management via Exception: the standard costing is an example for management via exception. By studying the variances, management's attentio

Under a contract with the provincial government, ChemLabs Inc. analyzes the chemical and bacterial composition of well water in various municipalities in the interior of British Co

Farmer Dorr figures that her fixed costs are $2,000, and the relevant portion of her total cost curve is:                                           Thousands of

why is determining the cost to manufacture a product quite a different activity from determining how to control such cost?