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
Uniform Costing It is a general system utilizing agreed concepts, standard and principles accounting practices adopted via different entities in the similar industry to ensure

1. The Initial Borrowings required are determined by the amount required to start  the project less the Cash Invested by the Corporation.  The loans will always be principle & inte

Logan Corporation issued $800,000 of 8% bonds on October 1, 2006, due on October 1, 2011. The interest is to be paid twice a year on April 1 and October 1. The bonds were sold to y

Controllable and Non Controllable Costs Controllable costs can be influenced on the level of authority at that they are being analyzed when non-controllable costs cannot.

You want to have $2,000,000 in your retirement account (IRA) at the end of 30 years. You hope to earn 6% per year. How much must you save each year?

The Clash Company uses Normal Job-Order Costing in its individual production department.  Overhead is applied to jobs by a predetermined rate, which is depend on machine hours.  Th

Determine When to Stock It will be influence with the inventory system in place as given: 1. Periodic order system. The firm obtains a new order of the amo

I just do not know which form those numbers should go in. I would canculate the results myself. Thanks John and Ellen Brite are married and file a joint return. They have no depend


BUDGET A BUDGET is a quantitative expression of a business plan for a particular future period, generally a year. BUDGET is the planned future course of action. BUDGET