ORIE_3150_homework_3_ProblemSet - uncollectible accounts On...

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ORIE 3150 Homework #3, Fall 2008 Due September 23, 2008 1. On Dec. 31, 2006, Long Company was preparing to adjust the accounts receivable account. Accounts Receivable balance, January 1, 2006 $35,500 debit Allowance for Uncollectible Accounts balance, January 1, 2006 $6,500 credit Sales Revenue, year ended December 31, 2006 $480,000 Uncollectible accounts written off during fiscal 2006 $6,800 Cash payments collected on accounts, fiscal 2006 $185,000 60% of the Sales Revenue in 2006 was for cash sales, the remainder was on account. Long Company uses the percentage of net credit sales method. They estimate that 4% of their sales on account will become uncollectible. a. How much Bad Debt Expense will Long Company show on their fiscal 2006 income statement? b. Show the adjusting journal entry needed to record Bad Debt Expense for fiscal 2006. c. What are the balances in Accounts Receivable and Allowance for Uncollectible Accounts (after adjustments) on December 31, 2006? 2. Precision Build Construction Incorporated uses the aging method for estimating
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Unformatted text preview: uncollectible accounts. On November 1, 2005, Accounts Receivable had a debit balance of $728,000, and Allowance for Uncollectible Accounts had a credit balance of $26,000. During the year, the company had net sales on account of $2,240,000, net cash sales of $1,380,000, accounts written off of $21,300, and cash collections from credit customers of $2,040,000. As part of the fiscal year end adjusting procedures on October 31, 2006, the company performs an aging of its Accounts Receivable and finds: Total $906,700 % Uncollectible Not Due $708,400 2% 1 – 30 $81,000 4 31 – 60 $58,000 20 61 – 90 $22,000 30 91+ days $37,300 50 a. Find the end-of-year balances in Accounts Receivable and Allowance for Uncollectible Accounts prior to adjustments. b. Provide the journal entry needed to record Bad Debt Expense for the fiscal year ended October 31, 2006. From the textbook: Problems 5-4, 5-5, Case 5-1...
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This homework help was uploaded on 02/20/2009 for the course ORIE 3150 taught by Professor Callister during the Fall '08 term at Cornell.

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