MGA 306 Study Guide - Final Guide: Accounts Receivable, Income Statement, Promissory Note

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burgundyfly983

13 Dec 2019

School

University at Buffalo

Department

Management Accounting

Course

MGA 306

Professor

Myungsun Kim

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Document Summary

Guidelines: accounts receivable are reported on the balance sheet net of the allowance for doubtful accounts, b/s. Xxx: aging analysis is used to estimate the dollar amount of the allowance for doubtful accounts, allowance = ar balance x estimated % uncollectible, allowance for doubtful accounts reduces a/r. Important: allowance for doubtful account is a balance sheet account, bad debt expense is an income statement account, writing off uncollectible. If a firm decides that a certain amount of receivable is uncollectible, it needs to be written off by that amount: gross ar less write-off, allowance for doubtful account less write-off. Inventory cost flows: note that inventory costing is a cost allocation process; allocating cost of. Goods available into cogs and ending inventory: beginning inventory. Inflation causes lifo to distort the economic value of inventory since. Lifo reserve = est fifo inventory - lifo inventory. Est fifo inventory = lifo reserve + lifo inventory. Lifo reserve = lifo cogs - fifo cogs.

Related Questions

The Septemberâ30,2017â,records of Perfecto Communications include theseâ accounts:

Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . .	$250,000
Allowance for Doubtful Accounts . . . . . . . . . . . . . . . . . . .	(8,300)

During theâ year,

Perfecto Communications estimatesâ doubtful-account expense atâ 1% of credit sales. Atâ year-end (Decemberâ 31), the company ages its receivables and adjusts the balance in the Allowance for Doubtful Accounts to correspond to the aging schedule. During the last quarter of 2017â, the company completed the following selectedâ transactions:

Nov 30

Wrote off as uncollectible the $1,300 account receivable from Brown Carpets and the $400 account

receivable from Priceless Antiques.

Dec 31

Adjusted the Allowance for Doubtful Accounts and recorded doubtful-account expense at year-end,

based on the aging of receivables.

	Age of Accounts
Accounts Receivable	1-30 Days	31-60 Days	61-90 Days	Over 90 Days
$236,000	$135,000	$55,000	$10,000	$36,000
Estimated percent uncollectible	0.2%	2%	15%	35%

Requirement 1. Record the transactions for the last quarter of 2017 in the journal. Explanations are not required. â(Record debitsâ first, then credits. Exclude explanations from any journalâ entries.)

Wrote off as uncollectible the $1,300 account receivable from Brown Carpets and the $400 account receivable from Priceless Antiques

Journal Entry
Date		Accounts	Debit	Credit
Nov	30

Adjusted the Allowance for Doubtful Accounts and recordedâ doubtful-account expense atâ year-end, based on the aging of receivables.

Journal Entry
Date		Accounts	Debit	Credit
Dec	31

Requirement 2. Prepare aâ T-account for Allowance for Doubtful Accounts with the appropriate beginning balances. Post the entries from Requirement 1 to that account.

Open theâ T-account by posting the beginning balance. Then post the entries to the Allowance for Doubtful Accountsâ T-account and calculate the ending balance.

Allowance for Doubtful Accounts

Requirement 3.will report its accounts receivable in a comparative balance sheet for

2016

and

2017

Use theâ three-line reporting format. At

December

â31,

2016

â,

theâ company's Accounts Receivable balance was

$ 213 comma 000

â,

and the Allowance for Doubtful Accounts stood at

$ 4 comma 700

	Perfecto Communications
	Comparative Balance Sheet (partial)
	December 31, 2017 and 2016

		2017

Less:

2016

Choose from any list or enter any number in the input fields and then continue to the next question.

redshark999

Learning Objective 4: Apply GAAP to uncollectible receivables at December 31, 2016, before any year-end adjustments, the Accounts Receivable balance of Haley Travel, Inc., is $400,000. The Allowance for Doubtful Accounts has a $19,600 credit balance. Haley Travel prepares the following aging schedule for Accounts Receivable:

Age of Accounts

Total Balance 1-30 Days 31-60 Days 61-90 Days Over 90 Days

$400,000 $180,000 $120,000 $80,000 $20,000

Estimated uncollectible 0.5% 5.0% 11.0% 50.0%

Requirements:

1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowance account adequate? Too high? Too low?

2. Make the entry required by the aging schedule. Prepare a T-account for the allowance.

3. Show how Haley Travel will report Accounts Receivable on its December 31 balance sheet

Solution:

	Req. 1




			1-30	31-60	61-90	Over 90	Total
			days	days	days	days	balance

	Est. % uncollectible		x .005	x .05	x .11	x .50
	Bal. in Allow. for Doubtful Accounts should be
	Bal. in Allow. for Doubtful Accounts should be		$ 0	$ 0	$ 0	$ 0	$ -
	Current balance
	Amount needed in adj. entry

	Req. 2
	Journal
	DATE	ACCOUNT TITLES AND EXPLANATION				DEBIT	CREDIT
	Dec. 31
							-



		Allowance for Doubtful Accounts


			Bal.



	Req. 3
	BALANCE SHEET
	Current assets:
		Cash					$ XX
		Short-term investments					XX
		Accounts receivable, net of allowance
		for doubtful accounts of $					*
	Or
	*Another way to report accounts receivable is
		Accounts receivable
		Less: Allowance for doubtful accounts

coffeesalmon341

Age of Accounts

Total Balance 1-30 Days 31-60 Days 61-90 Days Over 90 Days

$400,000 $180,000 $120,000 $80,000 $20,000

Estimated uncollectible 0.5% 5.0% 11.0% 50.0%

Requirements:

1. Based on the aging of Accounts Receivable, is the unadjusted balance of the allowance account adequate? Too high? Too low?

2. Make the entry required by the aging schedule. Prepare a T-account for the allowance.

3. Show how Haley Travel will report Accounts Receivable on its December 31 balance sheet

Solution:

	Req. 1




			1-30	31-60	61-90	Over 90	Total
			days	days	days	days	balance

	Est. % uncollectible		x .005	x .05	x .11	x .50
	Bal. in Allow. for Doubtful Accounts should be
	Bal. in Allow. for Doubtful Accounts should be		$ 0	$ 0	$ 0	$ 0	$ -
	Current balance
	Amount needed in adj. entry

	Req. 2
	Journal
	DATE	ACCOUNT TITLES AND EXPLANATION				DEBIT	CREDIT
	Dec. 31
							-



		Allowance for Doubtful Accounts


			Bal.



	Req. 3
	BALANCE SHEET
	Current assets:
		Cash					$
		Short-term investments
		Accounts receivable, net of allowance
		for doubtful accounts of $					*
	Or
	*Another way to report accounts receivable is
		Accounts receivable
		Less: Allowance for doubtful accounts

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MGA 306 Study Guide - Final Guide: Accounts Receivable, Income Statement, Promissory Note

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