Respuesta :
The allowance for uncollectible accounts at the end of 2017 amounts to $8,390, and the allowance for uncollectible accounts amounts to $38,010 on its balance sheet at the end of 2017.
The business for three years, makes all of its sales on credit and does not offer cash discounts is Accounts receivable-
a. b. c. ( b × 1% ) d. e. ( c-d )
Year Sales Bad Debts Expense for the year Accounts written off
2015 751000 7510 5300 2210
2016 876000 8760 5800 5170
2017 972000 9720 6500 8390
Accounts receivable balance is to be shown net of allowance balance at year end.
While the balance of accounts receivable will be equal to the total sales in the last 3 years net off to balances written off during this period and amounts collected during the period.
Actual Accounts receivable at the end of 2017
= Total sales in last 3 years - balances written off in last 3 years - amounts collected in last 3 years
= ( $751,000 + $876,000 + $972,000) - ($5,300 + $5,800 + $6,500) - ($733,000 + $864,000 + $938,000)
= $46,400.
While to be reported on Balance Sheet it is to be shown as net off to allowance amount.
1. Therefore balance to be reported = Actual Accounts receivable - Allowance at the end of year 2017
= $46,400 - $8,390
= $38,010.
2. Total amounts of Bad Debts expense for the income statements year-wise :
a. b. c. ( b × 1% )
Year Sales Bad Debts Expense for the year
2015 751000 7510
2016 876000 8760
2017 972000 9720
3. Amount for allowance for uncollectible accounts at the end of 2017
= $8,390 (calculated from the table at the top)
Complete question:
Barth Company, which has been in business for three years, makes all of its sales on credit and does not offer cash discounts. Its credit sales, customer collections, and write-offs of uncollectible accounts for its first three years follow:
Barth uses the allowance method of recognizing credit losses that provides for such losses at the rate of 1 % of sales. (This means the allowance account is increased by 1 % of credit sales regardless of any write-offs and unused balances.)
1) What amount for accounts receivable is reported on its balance sheet at the end of 2017?
2)What amount for allowance for uncollectible accounts is reported on its balance sheet at the end of 2017?
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