Prepare a revised aging schedule of account, Financial Management

Debit Credit

Accounts receivable $300,000

Allowance for doubtful accounts $35,000

Sales for 2010 were $5,500,000. All sales were sales on account. At the end of each month during 2010, Bobby Bookkeeper posted a journal entry recording bad debt expense for an amount equal to .75% (three quarters of one percent) of monthly sales, using the percentage of sales method. During 2009 collections of accounts receivable were $4,300,000.

A. Provide a journal entry to summarize the 12 monthly journal entries posted by the Bobby Bookkeeper during 2010 to record bad debt expense.

B. Provide a journal entry to summarize the collections of accounts receivable during 2010.

C. What is the amount of accounts receivable on December 31, 2010 according to the general ledger?

D. What is the amount of the allowance for doubtful accounts as of December 31, 2010?

On January 15, 2011, Andy Auditor arrives on the scene and asks to see an aging schedule of the accounts receivable as of December 31, 2010. Bobby Bookkeeper provides an aging schedule showing that:

  • 10% of the receivables are older than 60 days,
  • 20% of the receivables are between 31 and 61 days old, and
  • 70% of the receivables were less than 30 days old. Upon analysis of the $300,000 of accounts receivable, Andy sees:
  • Invoice # M45987 dated December 15, 2010 in the amount of $10,000, receivable from Denny Hecker, who is in prison pending trial for his multi-million fraud. and
  • Invoice #C98785 dated March 2, 2010 in the amount of $20,000 receivable from Trevor Cook who is in prison serving a 150 year term for fraud, Andy and Bobby discuss these invoices and decide they should be written off as of December 31, 2010.

E. Provide the journal entry that Bobby will post to write off these accounts.

Andy and Bobby decide that of the remaining accounts receivable (after the write-offs taken in E above) 1% of the receivables that are not past due should be estimated as uncollectible, 5 % of the receivables that are past due but less than 61 days old should be estimated as uncollectible, and 50% of the receivables that are more than 60 days past due should be estimated as uncollectible

F. Prepare a revised aging schedule showing ages of the accounts receivable after the write-offs. Be very careful with your dates. [Hint: Be sure to reflect the write-offs taken in E above, in the correct age category].

Posted Date: 3/20/2013 3:49:24 AM | Location : United States







Related Discussions:- Prepare a revised aging schedule of account, Assignment Help, Ask Question on Prepare a revised aging schedule of account, Get Answer, Expert's Help, Prepare a revised aging schedule of account Discussions

Write discussion on Prepare a revised aging schedule of account
Your posts are moderated
Related Questions
Q. Limitation of weighted average cost of the capital? 1) Determine the Weight; the first and foremost difficulty in computing the average cost is to an easy job. This type of

Q. Example on interest rate movements? Cap/floor volatility is consideration to be higher than swaption volatility because the market buys volatility trough swaptions as well a

Assessing Impact: As with the assessment of likelihood, a valuable way of assessing impact would be the creation of categories of impact as follows: Level

1.  Find out the present value of Rs. 10,000 to be required after 4 years if the interest rate is 6%. 2.  A Firm can invest Rs. 10,000 in a project with a life of three years.

Question 1: a) Describe fully why and how government intervenes in the foreign exchange market. b) "Changes in the equilibrium exchange rate between a pair of currencies rel

How would you judge the potential profit of Bajaj Electronics on the first year of sales to booth Plastics and give your views to increase the profit?

Roxanne invested $560,000 in a new business 7 years ago. The business was expected to bring in $8,000 each month for the next 26 years (in excess of all costs). The annual cost of

Discuss the process of  Maximise Profits Let's first look at profit maximisation.  Profit (also known as net income or earnings) canbe defined as the amount a business earns af

Q. Explain Risk Adjusted Discount Rate Method? In the risk adjusted discount rate method the future cash flow from capital projects are discount at the hazard adjusted discount

cost of capital, Financial Management The Nu-Nu Brothers Inc. (NNBI) has the following capital structure, which it considers to be optional: Debt 25% Preferred Stock 15% Common Equ