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mario62 [17]
2 years ago
7

Near the end of 2010, the ledger of Stivers Company included the following accounts and balances: Allowance for Doubtful Account

s$ 1,000credit balance Bad Debt Expense 0balance Accounts Receivable 200,000 debit balance Cash collections on accounts receivable during 2010 amounted to $450,000. Sales revenue during 2010 amounted to $800,000, of which 75% was on credit, and it was estimated that 2% of the credit sales made in 2010 would ultimately become uncollectible. Before adjusting entries were made for 2010, a $10,000 account was determined to be uncollectible and written off by Stivers. In the adjustment process, Bad Debt Expense was recorded to 2010. This information is not reflected in the account balances above.After the above entries were posted to the ledger, calculate the balances of the Allowance for Doubtful Accounts, Bad Debt Expense and Accounts Receivable. Indicate whether the balance is a debit or a credit.
Business
1 answer:
Minchanka [31]2 years ago
7 0

Answer and Explanation:

The computation of the balances of the Allowance for Doubtful Accounts, Bad Debt Expense and Accounts Receivable is shown below;

For Accounts receivable  

a) Opening balance $200,000 Debit balance

b) Current year credit sales (75% of $800,000) $600,000 Debit balance

c) (-) Current collection from accounts receivables -$450,000 Credit balance

d) (-) Bad debt expenses -$11,000 Credit balance

e) Closing balance of accounts receivables $339,000 Debit balance

for Allowance for Doubtful Accounts  

Allowance required as per Current year analysis (2% of (75% of $800,000) $12,000 Credit balance

(-) Opening balance $1,000 Credit balance

$11,000 Credit balance

The journal entry is  

Bad debt expense a/c …Dr   11000  

      To Allowance for Doubtful Accounts 11000  

The Closing balance of Allowance for Doubtful Accounts 12000 Credit balance

For Bad debt expenses  

The journal entry is    

Bad debt expense a/c …Dr   11000  

      To Allowance for Doubtful Accounts 11000  

The Closing balance of Bad debt expense account 0

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A company's competitive strength scores pinpoint its strengths and weaknesses against rivals and Select one: a. point directly t
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e. point directly to the kinds of offensive/defensive actions it can use to exploit its competitive strengths and reduce its competitive liabilities.

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8 0
3 years ago
On January 1, 2021, Ravetch Corporation’s projected benefit obligation was $51 million. During 2021, pension benefits paid by th
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Projected benefit obligation at December 31, 2021:

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Bargeron corporation has a target capital structure of 64 percent common stock, 9 percent preferred stock, and 27 percent debt.
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a.

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After tax cost of debt = 4.86%

6 0
3 years ago
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