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AveGali [126]
3 years ago
5

A newly created design business called Smart Art is just finishing up its first year of operations. During the year, there were

credit sales of $40,000 and collections of credit sales of $36,000. One account for $650 was written off. Smart Art uses the aging method to account for uncollectible account expense. It has estimated $200 as uncollectible at year-end. At the end of the year, what is the ending balance in the Bad Debts Expense account?
Business
2 answers:
Inessa05 [86]3 years ago
6 0

Answer:$34550

Explanation:

36000-650-(2%x40000)=$34550

vladimir2022 [97]3 years ago
4 0

Answer:

Bad debts expenses shall be $ 850

Explanation:

The balance in the bad debts expense account shall be the aggregate of the amounts written off and the estimated uncollectible accounts based on ageing at the year end.

Amount written off during the year                                                 $ 650

Estimated uncollectible account provided at year end                 <u>$ 200</u>

Total Bad Debts expenses                                                               $ 850

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Exercise 7-4A Effect of recognizing uncollectible accounts expense on financial statements: Percent of revenue allowance method
vfiekz [6]

Answer:

Rosie Dry Cleaning

a. Organization of the transaction data in accounts under an accounting equation:

Year 1:

The accounting equation is Assets = Liabilities + Equity.

1) Provided $29,940 of cleaning services on account.

Assets (Accounts Receivable) increases by $29,940; Equity (Retained Earnings) increases by $29,940.  So, Assets + $29,940 = Liabilities + Equity + $29,940.

2) Collected $23,952 cash from accounts receivable.

Assets (Cash) increases by $23,952 and Assets (Accounts Receivable) decreases by $23,952.  So, Assets + $23,952 and - $23,952 = Liabilities + Equity.

3) Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.

Assets (Accounts Receivable) reduces by $59.88 and Equity (Retained Earnings) reduces by $59.88.  So, Assets - $59.88 = Liabilities + Equity - $59.88.

Year 2:

1. Wrote off a $225 account receivable that was determined to be uncollectible.

Assets (Accounts Receivable) decreases by $225 and Equity (Retained Earnings) decreases by $225.  So, Assets - $225 = Liabilities + Equity - $225.

2. Provided $34,940 of cleaning services on account.

Assets (Accounts Receivable) increases by $34,940 and Equity (Retained Earnings) increases by $34,940.  So, Assets + $34,940 = Liabilities + Equity + $34,940.

3. Collected $30,922 cash from accounts receivable.

Assets (Cash) increases by $30,922 and Assets (Accounts Receivable) decreases by $30,922.  So, Assets + $30,922 - $30,922 = Liabilities + Equity.

4. Adjusted the accounting records to reflect the estimate that uncollectible accounts expense would be 1 percent of the cleaning revenue on account.

Assets (Accounts Receivable) decreases by $37.93 ($97.81 - $59.88) and Equity (Retained Earnings) decreases by $37.93.  So, Assets - $37.93 = Liabilities + Equity - $37.93.

b. 1) Net Income for Year 1:

Sales = $29,940

less Allowance for uncollectible = $59.88)

Total = $29,880.12

2) Net Cash Flows from operating activities for Year 1 = $23,952.

3) Balance of Accounts Receivable at the end of Year 1:

Sales = $29,940

Less Cash Receipt = $23,952

Balance = $5,988

4) Net Realizable value of accounts receivable at the end of Year 1.

Accounts Balance = $5,988

less Allowance for Uncollectible = $59.88

Net Realizable = $5,928.12

c 1) Net Income for Year 1:

Sales = $34,940

less Bad Debts Expense = $262.93 ($37.93 + $225)

Total = $34,677.07

2) Net Cash Flows from operating activities for Year 1 = $30,922.

3) Balance of Accounts Receivable at the end of Year 1:

Beginning balance = $5,988

Sales = $34,940

Less Bad Debts Expense = $225

Less Cash Receipt = $30,922

Balance = $9,781

4) Net Realizable value of accounts receivable at the end of Year 1.

Accounts Balance = $9,781

less Allowance for Uncollectible = $97.81

Net Realizable = $9,683.19

Explanation:

The accounting equation states that Assets equal Liabilities plus Equity.  Any change in one side of the equation affects the other.  Sometimes, a transaction or event affects one side only by increasing one account and decreasing another account on the same side of the equation.  Examples are demonstrated in the answer above.

When an uncollectible is deemed bad, it reduces the Accounts Receivable and increases the bad debt expense.  The overall effect on the accounting equation is a reduction in Assets and Equity respectively.

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3 years ago
What elements of the marketplace in which megatech operates led the firm to believe that project management would improve its op
Mariana [72]

   International competitors suddenly appear in greater numbers as a result of the mentioned changes in trade agreements, Megatech now needs to contend with more and new competitors.

<h3>In terms of the marketplace there are three primary types of companies?</h3>

There are three main categories of businesses in the market

international businesses, multinational businesses, and transnational businesses.

International businesses only import and export; they do not have any investments abroad.

        Although multinational corporations have offices or facilities in several different nations, each one operates independently, basically as a separate legal entity.

Organizationally, multinational corporations are far more complex. It is a commercial enterprise that runs big facilities, conducts business internationally, and does not identify with any particular nation as its national home. A multinational company's ability to maintain a higher level of responsiveness to the local market is one of its key advantages.

To know more about Marketplace, visit

brainly.com/question/14887488

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3 0
1 year ago
Finish Co. uses the allowance method to account for bad debts. At the end of 2010, Finish Co.'s unadjusted trial balance shows a
Nana76 [90]

Answer:

The answer is: D) $5,800

Explanation:

The doubtful accounts should have a total balance of $6,000, representing 1% of total sales (= $600,000 x 1%).

Since doubtful accounts balance is only $200, you must entry a debit record of $5,800 (so that the total balance of that account is $6,000).

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3 years ago
Which of the following statements regarding quality-control inspections is true? a.Inspection requires product tear down. b.Insp
Nimfa-mama [501]

Answer: The answer is C. Inspection requires both product tear down and product reassembly.

Explanation: The aim of quality-control inspections is to ascertain whether a product has been made according to specifications, and whether there are any defects in the products.

Therefore quality-control inspections will involve product tear down, in order to check the component parts of a product for quality assurance, and product reassembly is carried out after the product tear down to reassemble the products if it is discovered that it meets quality standard.

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Current labor market trends include _____.answer.com
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an increase in service jobs accompanied by a decrease in manufacturing jobs

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