Prepare the account for allowance for bad debts, Accounting Basics

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

Dr. Cr. Allowance for Bad Debts........................... $2,300

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 $900. 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 July.

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 using balance sheet approach. An aging schedule indicates that $1,200 of accounts receivable will be uncollectible. 31 December Anika had an Accounts Receivable Balance of $41,000

Required:

a. Create a worksheet in your excel file and name it "Part A Q3". 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 H1. 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 5th January 2010, do you think that the bad debt estimation was correct in 2009? Record your answer in word document.

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 balance estimated as per ageing schedule (i.e. $ 1,500)? 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 5:23:44 AM | Location : United States







Related Discussions:- Prepare the account for allowance for bad debts, Assignment Help, Ask Question on Prepare the account for allowance for bad debts, Get Answer, Expert's Help, Prepare the account for allowance for bad debts Discussions

Write discussion on Prepare the account for allowance for bad debts
Your posts are moderated
Related Questions
Draw a stem-and-leaf plot for the data set. (Enter numbers from smallest to largest separated by spaces. Enter NONE for stems with no values.) Data set A: The annual wages of emp

Explain the term- CASH SHORT AND OVER This account is used to record both a shortage and overage of cash in cash drawer. When change is made during a business day, mistakes can

The information contained in published financial statements is of specific importance to external users, as shareholders and investors. Without any information they would not be ca

Explain the Recording employer's payroll taxes Debited to an expense account-Payroll Tax Expense. Credited to individual Tax Payable accounts These amounts are then sent

Dividing Partnership Income Desmond Drury and Ty Wilkins have decided to form a partnership. They have agreed that Drury is to invest $44,700 and that Wilkins is to invest $1

I need help in a project on 'accounting process' . It should begin with a storyline in which a buisness have to be chosen(i have chosen a tyres dealer). Then transactions taking

How do you round up to one decimal point using percentages? Example 0.207 Thanks

Q. What do you understand by Goodwill? Goodwill -- in accounting, difference between what a company pay when it buys theassets of another company and book value of those assets

Q. Explain about Accountants record expenditures? Accountants record expenditures on physical resources such like buildings, land and equipment that benefit future periods as a

Management: Organizations may not or may exist for the sole reason of profit. Though, information requires of the managers of both types of organizations are approximately the sam