Aging of Accounts Receivable of BCK Company shows the following balances on Dec.
ID: 2461374 • Letter: A
Question
Aging of Accounts Receivable of BCK Company shows the following balances on Dec. 31, 2013:
--------------------------------------------A/R Balances---------------Estimation of Bad Debt Percentage
Current Accounts-------------------$930,000---------------------2%
30 days past due-------------------$150,000---------------------12%
60 days past due-------------------$75,000-----------------------18%
90 days past due-------------------$26,000-----------------------40%
Over 90 days past due-----------$14,000-----------------------70%
a) Compute the estimation of Allowance for Bad Debt and jounalize the estimation on Dec. 31, 2013. The Allowance for Bad Debt has zero balance at that time.
b) Compute the Balance of A/R and show the reporting of A/R on the Balance Sheet of Dec. 31, 2013 at net.
c) On Feb. 12, 2014, an A/R account which has $65,000 balance defaulted and was written-off. Journalize this transaction.
d) On April 25, 2014, A/R number 17, which has a balance of $200,000 was factored (sold) for $188,000. Journalize this transaction.
e) ACC Company has a $500,000 one-year Notes Receivable dating July 1, 2012 to June 30, 2013 and carries 6% interest. On Jan. 2, 2013, the company needed cash and discounted (sold) the N/R for $478,000. Journalize on July 1, 2012, Dec. 31, 2012 and Jan. 2, 2013.
Explanation / Answer
Bad debt is as follows:
a.
b.
Balance of accounts receivable is as follows:
Same will be reported in balance sheet under Head Current assets.
c)
Bad Debts 65,000
Accounts Receivable 65,000
d)
Cash 188,000
Bad Debt 12,000
AR 200,000
e)
Notes Receivable 500,000
AR 500,000
Interest Receivable 15,000
Interest Income 15,000
Cash 478,000
AR 27,000
Notes Receivable 500,000
Interest Receivable 15,000
AR Balances Estimation of Bad Debt Percentage Bad debts Current Accounts 9,30,000 2% 18600 30 days past due 1,50,000 12% 18000 60 days past due 75,000 18% 13500 90 days past due 26,000 40% 10400 Over 90 days past due 14,000 70% 9800