The following information was taken from the records of AlphabetSoup at the end of 2012:
Cash sales $1,000,000 Credit sales 500,000 Sales discounts 5,000 Accounts Receivable 250,000 Allowance for Doubtful Accounts(before adjustment) (25,000) Estimated uncollected accounts 2,475 Cost of goods sold $975,000
Determine the following:
A) Gross sales
B) Net sales
C) Gross Profit
Assuming the company uses the income statement approach toestimating uncollectibles:
D) Bad debt estimate percentage
F) Ending balance in Allowance for Doubtful Accounts afteradjustment
G) Net realizable value of receivables after adjustment for baddebts
Assuming the company uses the balance sheet approach toestimating uncollectibles:
H) Gross receivables
The following information was taken from the records of AlphabetSoup at the end of 2012:
| Cash sales | $1,000,000 |
| Credit sales | 500,000 |
| Sales discounts | 5,000 |
| Accounts Receivable | 250,000 |
| Allowance for Doubtful Accounts(before adjustment) | (25,000) |
| Estimated uncollected accounts | 2,475 |
| Cost of goods sold | $975,000 |
Determine the following:
A) Gross sales
B) Net sales
C) Gross Profit
Assuming the company uses the income statement approach toestimating uncollectibles:
D) Bad debt estimate percentage
F) Ending balance in Allowance for Doubtful Accounts afteradjustment
G) Net realizable value of receivables after adjustment for baddebts
Assuming the company uses the balance sheet approach toestimating uncollectibles:
H) Gross receivables
Related questions
The trial balance before adjustment of Risen Company reports the following balances:
| Dr. | Cr. | |||
| Accounts receivable | $300,000 | |||
| Allowance for doubtful accounts | $5,000 | |||
| Sales (all on credit) | 1,700,000 | |||
| Sales returns and allowances | 80,000 |
nstructions
(a) Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be 6% of gross accounts receivable.
(b) Assume that all the information above is the same, except that the Allowance for Doubtful Accounts has a debit balance of $5,000 instead of a credit balance. How will this difference affect the journal entries in part (a)?
(c) what is the theoretical justification for the percentage -of-recievables method used to estimate bad debts?
