5. Donut Hole Foods estimates the allowance for uncollectible accounts at 3% of

Question

5. Donut Hole Foods estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts receivable. During 2016, Donut Hole Foods’ credit sales and collections were 125,000 and 131,000, respectively. What was the balance of accounts receivable on January 1, 2016, if 180 in accounts receivable were written off during 2016 and if the allowance account had a balance of 750 on December 31, 2016?

6. The following information relates to Meehan Agency’s accounts receivable for 2016: Accounts receivable balance, 1/1/2016 840,000 Credit sales for 2016 3,300,000 Accounts receivable written off during 2016 70,000 Collections from customers during 2016 3,100,000 Allowance for uncollectible accounts balance, 12/31/2016 210,000 What amount should Meehan report for accounts receivable, before allowances, at December 31, 2016?

7. Poppy Produce estimates bad debt expense at ½% of credit sales. The company reported accounts receivable and allowance for uncollectible accounts of $471,000 and $1,650, respectively, at December 31, 2015. During 2016, Poppy's credit sales and collections were $315,000 and $319,000, respectively, and $1,720 in accounts receivable were written off. Poppy's 2016 bad debt expense is:

Explanation / Answer

5) Allowance for uncollectible accounts 3% Balance of accounts receivable on 31st Dec 2016 = 750*100/3    = 25000 closing balance = opening balance + credit sales - collection - receivables written off opening balance = closing balance - credit sales + collections + receivables written off                                    = 25000 - 125000 + 131000 + 180                                       = 31180 6) opening valance 1/1/16 840000 credit sales 3300000 accounts written off 70000 collections from customers 3100000 allowance for uncollectibles 210000 before allowance closing balance = opening balance + credit sales - collection - receivables written off                                 = 840000 + 3300000 - 3100000 - 70000                                 = 970000 7) Bad debt expense 1/2% opening valance 1/1/16 471000 allowance for uncollectibles 1650 credit sales 315000 collections from customers 319000 accounts written off 1720 467000 closing balance = opening balance + credit sales - collection - receivables written off                                = 471000 + 315000 - 319000                                = 467000 allowance for uncollectibles 31/12/2016 = 467000 * 1/2 % = 2335 closing allowance = opening allowance - accounts written off + Bad debt expense bad debt expense = closing allowance + accounts written off - opening allowance = 2335 + 1720-1650                                      = 2405

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