Dollar effect of the year-end bad debt adjustment = 74292+6000 = $80292 This is
ID: 2528371 • Letter: D
Question
Dollar effect of the year-end bad debt adjustment = 74292+6000 = $80292
This is the answer above. Here are the questions...
What is the appropriate balance for the Allowance for Doubtful Accounts at year-end?
Show how accounts receivable would be presented on the balance sheet.
What is the dollar effect of the year-end bad debt adjustment on the before-tax income?
Your well-written paper must be 2 pages
a Days Account Outstanding Amount Probability of Not Collecting Allowance Less than 16 days 351600 0.03 10548 Between 16 and 30 days 122400 0.11 13464 Between 31 and 45 days 84000 0.17 14280 Between 46 and 60 days 66000 0.24 15840 Between 61 and 75 days 33600 0.4 13440 Over 75 days 9600 0.7 6720 Total 667200 74292 Allowance for Doubtful Accounts at year-end=$74292 b Current assets: Accounts Receivable 667200 Less: Allowance for Doubtful Accounts 74292 Accounts Receivable - Net 592908 cDollar effect of the year-end bad debt adjustment = 74292+6000 = $80292
This is the answer above. Here are the questions...
What is the appropriate balance for the Allowance for Doubtful Accounts at year-end?
Show how accounts receivable would be presented on the balance sheet.
What is the dollar effect of the year-end bad debt adjustment on the before-tax income?
Your well-written paper must be 2 pages
Explanation / Answer
Answer a.
The appropriate balance for the Allowance for Doubtful Accounts at year-end is $74292.
The same has been calculated considering the probability of non- collection of accounts recievable pending over the period of time. Likewise, for accounts recievable outstanding for over 75 days , the probability of getting them recovered is only 30% giving us the indiciation that the probability of them not getting recovered is 70%.
Answer b.
The accounts recievable would be persented as below:
Asset Side:
Current Assets
Accounts Recievable.............................................................................................. $ 667200
Less: Allowance for doubtful debts........................................................................... $ 74292
Net Accounts Recievable........................................................................................ $ 592908
Answer c.
The dollar effect of the year-end bad debt adjustment on the before-tax income depends on the amount of provision being created for bad debt. Considering the information avaliable, the expense to be charged is equal to the amount of allowance for doubtful debts i.e., $ 74292.
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