The following selected information is from Company A\'s Year 2 and Year 3 financ
ID: 2401101 • Letter: T
Question
The following selected information is from Company A's Year 2 and Year 3 financial statements:
The company uses the balance-sheet approach to calculate the allowance for uncollectible accounts. The company estimates that 4% of its gross accounts receivable will become uncollectible. During Years 2 and 3, no accounts previously written off became payable.
Complete Company A's balance sheet using the information above. Enter the appropriate amounts in the designated cells below. Enter all amounts as positive values. Round all amounts to the nearest dollar. If no entry is necessary, enter a zero (0).
Item
Amount
January 1, Year 2, accounts receivable $20,000 Bad debt expense recognized in Year 2 1,480 Accounts receivable written off in Year 2 1,000 January 1, Year 2, allowance for uncollectible accounts 800 Credit sales in Year 2 95,000 Accounts receivable written off in Year 3 2,000 Credit sales in Year 3 100,000 Cash collected from customers in Year 3 85,000Explanation / Answer
Answers
Working
Accounts receivables
Allowances forUncollectible accounts
Bad Debt Expenses
Year 2
A [given]
Jan 1, Year 2
$ 20,000.00
$ 800.00
B [given]
Year 2, BD expense recognised
$ 1,480.00
$ 1,480.00
C
Year 2, Accounts written off
$ (1,000.00)
$ (1,000.00)
D
Credit Sale Year 2
$ 95,000.00
E
Adjusted balances
$ 32,000.00
$ 1,280.00
$ 1,480.00
F = A + (-C) + D - E
Cash received during Year 2
$ 82,000.00
Year 3
G
Credit Sales, Year 3
$ 100,000.00
G1
Accounts receivables written off
$ (2,000.00)
$ (2,000.00)
H
Cash Collected in Year 3
$ (85,000.00)
I = E + G + (-G1) + (-H)
Ending (unadjusted balances)
$ 45,000.00
$ (720.00)
$ -
J
Adjusted balances
$ 45,000.00
$ 1,800.00
K = J - I
Bad Debt Expense for Year 3
$ 2,520.00
$ 7,400.00
Item
Amount
1. December 31, Year 2, allowance for uncollectible accounts
$ 1,280.00
2. December 31, Year 2, accounts receivable
$ 32,000.00
3. Cash collected from customers in Year 2
$ 82,000.00
4. December 31, Year 3, accounts receivable
$ 45,000.00
5. December 31, Year 3, allowance for uncollectible accounts
$ 1,800.00
6. Bad debt expense recognized in Year 3
$ 2,520.00
Working
Accounts receivables
Allowances forUncollectible accounts
Bad Debt Expenses
Year 2
A [given]
Jan 1, Year 2
$ 20,000.00
$ 800.00
B [given]
Year 2, BD expense recognised
$ 1,480.00
$ 1,480.00
C
Year 2, Accounts written off
$ (1,000.00)
$ (1,000.00)
D
Credit Sale Year 2
$ 95,000.00
E
Adjusted balances
$ 32,000.00
$ 1,280.00
$ 1,480.00
F = A + (-C) + D - E
Cash received during Year 2
$ 82,000.00
Year 3
G
Credit Sales, Year 3
$ 100,000.00
G1
Accounts receivables written off
$ (2,000.00)
$ (2,000.00)
H
Cash Collected in Year 3
$ (85,000.00)
I = E + G + (-G1) + (-H)
Ending (unadjusted balances)
$ 45,000.00
$ (720.00)
$ -
J
Adjusted balances
$ 45,000.00
$ 1,800.00
K = J - I
Bad Debt Expense for Year 3
$ 2,520.00
$ 7,400.00
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