I1I-(20 points) Aging of Accounts Receivable of BCK company shows the following
ID: 2579819 • Letter: I
Question
I1I-(20 points) Aging of Accounts Receivable of BCK company shows the following balances on Dec.31,2013: estimation of bad debt A/R balancespercantage $930,000 150,000 75,000 26,000 14,000 2% 12% 18% 40% 70% Current Accounts 30 days past due 60 days past due 90 days past due Over 90 days past due a) compute the estimation of Allowance for Bad Debt and Journal- ize the estimation on Dec. 31,2013. The Allow. 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 balan $200,000 was factored action. (sold) for $188,000. Journalize this trans- e) ACc Company has a s500,000 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, 2013Explanation / Answer
a. Estimation of allowance for bad debt Estimation of allowance Current Accounts 930000 2% 18600 30 days past due 150000 12% 18000 60 days past due 75000 18% 13500 90 days past due 26000 40% 10400 over 90 days past due 14000 70% 9800 Total 1195000 70300 Journal Bad Debt Exp Debit 70300 to Allowance of doubtful Debt 70300 b. Balance of AR and Reporting of AR Reporting Total AR 1195000 Less: Estimation of Allowance for Bad Debt 70300 1124700 Balance of AR 1124700 c. Defaulted Allowance for doubtful Debt Debit 65000 to Account Receivable 65000 d. Factoring Due from Factor Debit 188000 Factoring Expense Account Debit 12000 to Account Receivable 200000