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Diano4ka-milaya [45]
3 years ago
11

Account receivable for Crimson Inc. at the end of December 31, 2018 totals $200,000. This balance is due to four customers not p

aying their bill by the end of the year. James owes $50,000; Fred owes $64,000; Bernie owes 36,000; and Terry owes $50,000. The probabilities of James not paying has been determined to be 20% and Fred, Bernie, and Terry were each assessed a 10% probability.If the balance in the allowance for doubtful accounts has a debit balance of $10,000 then what would be the adjusting entry to needed to update Crimson Inc.’s books?
Business
1 answer:
ivolga24 [154]3 years ago
5 0

Answer:

The adjusting entry to needed to update Crimson Inc.’s books is:

Debit Bad debt expense                                $35,000

Credit Allowance for doubtful accounts       $35,000

<em>(To record bad debt expense)</em>

Explanation:

Crimson Inc. uses the credit risk loss percentage in estimating the amount of accounts receivable that is uncollectible. This approach is similar to the aging method. We would calculate the estimated uncollectible amount as follows:

Debtor  Estimated     Percent   Uncollectible amount

James   $50,000        20%       $10,000

Fred      $64,000        10%         $6,400

Bernie   $36,000        10%         $3,600

Terry     $50,000        10%         $5,000

Total   $200,000                     $25,000

If the balance in the allowance for doubtful accounts has a debit balance of $10,000 then Bad debt expense will be $25,000 + $10,000 = $35,000. The required adjustment is as recorded above.

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d. capability maturity model

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3 years ago
Fisher Inc. wants to bring radical change to the current skills that exist in the organization, so they are going to employ ____
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<h3 /><h3>Change management</h3>

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2 years ago
Bramble Corporation is a small wholesaler of gourmet food products. Data regarding the store's operations follow: Sales are budg
Sati [7]

Answer:

Bramble Corporation

The difference between cash receipts and cash disbursements for December would be:

=  $71,000

Explanation:

a) Data and Calculations:

Balance Sheet October 31

Assets Cash                            $ 21,400

Accounts receivable                  71,400

Merchandise inventory           156,800

Property, plant and equipment,

net of $573,400 accumulated

depreciation                        1,095,400

Total assets                      $ 1,345,000

Liabilities and Stockholders' Equity

Accounts payable              $ 255,400

Common stock                      821,400

Retained earnings                268,200

Total liabilities and

stockholders' equity      $ 1,345,000

                                     November       December      January

Budgeted sales            $320,000        $300,000   $290,000

Cash Collections:

55% month of sale         176,000            165,000      159,500

45% following month       71,400             144,000      135,000

Total collections          $247,400         $309,000   $294,500

Cost of goods sold     $224,000         $210,000    $203,000

=  (70% of Sales for the month)

Ending Inventory            147,000            142,100

Goods available           $371,000        $352,000

Beginning Inventory      156,800            147,000       142,100

Purchases                    $214,200        $205,000

Cash disbursements:

Payment to suppliers   255,400           214,200      205,000

Other monthly exp.        23,800             23,800

Total disbursements $279,200         $238,000

Comparison of Cash receipts with Cash disbursements:

                                   November       December

Cash receipts             $247,400         $309,000

Cash disbursements $279,200         $238,000

Difference                    ($31,800)           $71,000

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