Evaluate the following scenarios, assuming both companies use the net credit sales as the basis for estimating bad debts expense:
a. At year end, Bonnie Company has accounts receivable of $112,000. The allowance for uncollectible accounts has a balance prior to adjustments of $(400). In other words, there were fewer specific write-offs than estimated., leaving an excess in the allowance account. Net credit sales for the year were $315,000 and 3% is estimated to be uncollectible.
b. At year end, Clyde Company has acounts receivable of $220,000. The allowance for uncollectible accounts has a balance prior to adjustment of $200. In other words, more specific accounts were written off than estimated, so the allowance was short by $200. Net credit sales for the year were $1,525,000 and 1% is estimated to be uncollectible.
Requirements
for each situation compute the following:
1. the bad debts expense for the year
2. the balance in the allowance for uncollectible accounts account at year end
3. the net realizable value of accounts receivable at year end
4. assuming Bonnie company had an accounts receivable (net) balance of $105,000 at the beginning of the year, what is Bonnie accounts receivable turnover ratio for the year
5. Assuming Clyde Company had an accounts receivable (net) balance of $226,000 at the beginning of the year, what is Clyde’s accounts receivable turnover ratio for the year?
Sheet3 Sheet2 Sheet1 A B C D E G H Name Section F End of Problem Situation a. Accounts receivable Net credit sales Percentage estimated to be uncollectible Bad debt expense for the year Situation b. Balances at year end: Allowance for uncollectible accounts (credit balance) Allowance for uncollectible accounts (debit balance) Allowance for uncollectible accounts balance Net realizable value of accounts receivable Bonnie Company Clyde Company Accounts receivable turnover ratio Average net accounts receivables Problem 4-49A Beginning accounts receivable balance for part 4 Beginning accounts receivable balance for part 5 Formula 1 Formula 2 Formula 3 Formula 4 Formula 5 Formula 6 Formula 8 Formula 7 Formula 9 Formula 10 Reimers, Financial Accounting 3e 5.00 6.00 7.00 $112,000.00 8.00 400.00 9.00 $315,000.00 10.00 0.03 11.00 $105,000.00 12.00 13.00 14.00 15.00 16.00 17.00 18.00 19.00 20.00 $220,000.00 21.00 200.00 22.00 $1,525,000.00 23.00 0.01 24.00 $226,000.00 25.00 26.00 27.00 28.00 29.00 30.00 Sheet3 Sheet2 Sheet1 A B C D E G H Name Section F End of Problem Situation a. Accounts receivable Net credit sales Percentage estimated to be uncollectible Bad debt expense for the year Situation b. Balances at year end: Allowance for uncollectible accounts (credit balance) Allowance for uncollectible accounts (debit balance) Allowance for uncollectible accounts balance Net realizable value of accounts receivable Bonnie Company Clyde Company Accounts receivable turnover ratio Average net accounts receivables Problem 4-49A Beginning accounts receivable balance for part 4 Beginning accounts receivable balance for part 5 Formula 1 Formula 2 Formula 3 Formula 4 Formula 5 Formula 6 Formula 8 Formula 7 Formula 9 Formula 10 Reimers, Financial Accounting…
Attachments:
p4-49a.xls