Uncollectible accounts, Accounting Basics

Assignment Help:

The Olympic Company has an accounts receivable balance at December 31, 2010 of $159,548.00.  The existing balance in the Allowance for Uncollectible Accounts was a credit of $2,563.94.  The company had net sales during 2010 of $789,933.00.

Prepare the adjusting entry at December 31, 2010 to record the estimated uncollectible accounts under each of the following assumptions:                

a)  The company uses the percentage of receivables method and estimates that 3% of their accounts receivables will not be collectible.   

b)  The company uses the percentage of sales method and estimates that 1% of their net sales will be uncollectible.               

Answer:                                              

                Accounts receivable on 31.12.10               159,548.00         

                Allowance for uncollectible accounts      2,563.94             

                Net sales during 2010     789,933.00         

a)            Estimated uncollectible accounts              =3% * 159548   

                                 4,786.44             

                Existing Allowance for uncollectible accounts      2,563.94             

                Therefore provision to be created           2,222.50             

 

                Bad debt expense A/c..........Dr   2,222.50             

                     To Allowance for uncollectible accounts                           2,222.50

                (To record estimate of uncollectible accounts)                  

 

b)            Estimated uncollectible accounts              =1% * 789933   

                                 7,899.33             

                Existing Allowance for uncollectible accounts      2,222.50             

                Therefore provision to be created           5,676.83             

                Bad debt expense A/c..........Dr   5,676.83             

                     To Allowance for uncollectible accounts                           5,676.83

                (To record estimate of uncollectible accounts)                

 


Related Discussions:- Uncollectible accounts

Common adjustments in balance sheet, COMMON ADJUSTMENTS AFFECTING THE PREPA...

COMMON ADJUSTMENTS AFFECTING THE PREPARATION OF BALANCE SHEET ARE: 1. Closing stock :  Closing stock come into view on the credit side of trading account and assets side of

Generally accepted auditing standards, Generally Accepted Auditing Standard...

Generally Accepted Auditing Standards (GAAS) - Standards set by AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA) which concern AUDITOR'S professional qualities and judgme

Concepts of accounting, implication of applying aacounting concept wronly

implication of applying aacounting concept wronly

How to get accounting exam help, Hi, How to get help with tutor, in account...

Hi, How to get help with tutor, in accounting exam prepartion? please suggest?

Example of periodic inventory procedure, Q. Example of Periodic inventory p...

Q. Example of Periodic inventory procedure? Periodic inventory procedure Merchandising companies selling small unit value merchandise such like nuts and bolts Christmas cards n

Open item managed account, What do you recognize by Open Item Managed Accou...

What do you recognize by Open Item Managed Account? Ans) Open item management make sures that all items that have not yet been cleared are available in the system. Only after ea

On december 31, On December 31, 2013, a company issues bonds with a par val...

On December 31, 2013, a company issues bonds with a par value of $600,000. The bonds mature in 10 years, and pay 6% annual interest, payable each June 30 and December 31. The bon

An invoice for product x totals $1, An invoice for product X totals $1,200 ...

An invoice for product X totals $1,200 and is dated July 6, 2000 with terms 2/10-60X. If the invoice is paid on September 3, 2000, what is the net amount of payment? A. $912

What is an accounts receivables?, Money owed by a business enterprise for m...

Money owed by a business enterprise for merchandise bought on open account. It is also known as  "A/R" or just "Receivables". Accounts Receivable is the quantity owed to a company

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd