Business, 28.06.2021 16:40 perezsamantha3oqr0za

Estimating Uncollectible Accounts and Reporting Accounts Receivable Collins Company analyzes its accounts receivable at December 31, and arrives at the age categories below along with the percentages that are estimated as uncollectible. Age Group Accounts Receivable Estimated Loss % 0-30 days past due $110,000 1% 31-60 days past due 40,000 2 61-120 days past due 27,000 5 121-180 days past due 14,000 10 Over 180 days past due 9,000 25 Total accounts receivable $200,000The balance of the allowance for uncollectible accounts is $1,100 on December 31, before any adjustments. (a) What amount of bad debts expense will Collins report in its income statement for the year?
(b) Use the financial statement effects template to record Collin's bad debts expense for the year.

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Answer from: juana18

A. $5,800

B. Record bad debts expense$0 -$5,800 $0$0-$5,800; $0 $5,800=-$5,800

Explanation:

Calculation to determine What amount of bad debts expense will Collins report in its income statement for the year

First step is to Compute the Allowance for Uncollectible Accounts

AgeingAccounts Receivables% UncollectibleRequired Allowance

0-30 days$110,000*1%=$1,100

31-60 days$40,000*2%=$800

61-120 days past due $27,000*5%=$1,350

120-180 days$14,000*10%=$1,400

More than 180 days $9,000*25%=$2,250

Total$200,000$6,900

($1,100+$800+$1,350+$1,400+$2,250=$6,900)

Now let determine the amount of bad debts expense using this formula

Amount of bad debts= Required balance in allowance account - Existing balance

Let plug in the formula

Amount of bad debts= $6,900 - $1,100

Amount of bad debts= $5,800

Therefore the amount of bad debts expense that Collins will report in its income statement for the year is $5,800

B. Calculation to record Collin's bad debts expense for the year using the financial statement effects template

Balance Sheet ; Income statement

Record bad debts expense=Cash+Non Cash Assets=Liabilities+Contributed capital+Earned Capital ; Revenue-Expenses=Net Income

Record bad debts expense=$0 -$5,800 $0$0-$5,800; $0 $5,800=-$5,800

Therefore Using the financial statement effects template to record Collin's bad debts expense for the year will be:

Record bad debts expense$0 -$5,800 $0$0-$5,800; $0 $5,800=-$5,800

Answer from: Quest

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Estimating Uncollectible Accounts and Reporting Accounts Receivable Collins Company analyzes its acc...

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