An analysis of an entity's US $150, 000 accounts receivable at year-end resulted in a US $5, 000 ending balance for its allowance for uncollectible accounts and a bad debt expense of US $2, 000. During the past year. recoveries on bad debts previously written off were correctly recorded at US $500. If the beginning balance in the allowance for uncollectible accounts was US $4, 700. what was the amount of accounts receivable written off as uncollectible during the year?
Answer(s): C
Under the allowance method, uncollectible accounts are written off by a debit to the allowance account and a credit to accounts receivable. The US $500 bad debts is accounted for by a debit to accounts receivable and a credit to the allowance account. The US $2, 000 bad debt expense is also credited to the allowance account. The amount of accounts receivable written off as uncollectible is US $2, 200 [$5, 000 ending allowance - $4.700 beginning allowan, .8 + $500 recoveries + $2, 000 bad debt expense)].
At the end of September, a entity has outstanding accounts receivable of US $350 on third-quarter credit sales, composed as follows.The percentage of receivables in the 31-to-5O-day age group at the end of September is
Receivables from August sales still outstanding at the end of September are in the 31 to- 60-day age group. This group represents 48.57% of total receivables [US $170 -$100 + $170+ $80)].An entity sells goods on an installment basis. The table below includes information about the level of installment sales, the cost of the goods sold on installment, and the cash receipts on installment sales for Year 1 through Year 3. All cash receipt amounts shown are net of any interest charges.
The rate of gross profit on Year 2 installment sales is
Answer(s): A
The rate of gross profit on Year 2 installment sales is 20% [(US $5, 000 of Year 2 installment sales - $4, 000 cost of Year 2 installment sale=, ) - $5, 000 of Year 2 installment sales].An entity sells goods on an installment basis. The table below includes information about the level of installment sales, the cost of the goods sold on installment, and the cash receipts on installment sales for Year 1 through Year 3. All cash receipt amounts shown are net of any interest charges.
The amount of gross profit to be recognized in Year 1 on Year 1 installment sales is
In Year 1. cash receipts were US $2, 000 from Year 1 installment sales. The gross profit realized is the gross profit on the portion of sales for which payment has been received. This amount equals the Year 1 gross profit percentage multiplied by the cash receipts. or US $800 {[($10.000 - $6, 000) $10, 000] x $2.000}.An entity sells goods on an installment basis. The table below includes information about the level of installment sales, the cost of the goods sold on installment, and the cash receipts on installment sales for Year 1 through Year 3. All cash receipt amounts shown are net of any interest charges.
The gross profit amount from Year 3 sales to be deferred to future years would be
The total gross profit on Year 3 sales is US $10, 000$20, 000 sales $10, 000 cost), and the amount realized is US $2, 000 {[($20, 000 $10, 000) $20, 000] x $4, 000 of Year 3 cash receipts}. Accordingly, the amount deferred is US $8, 00010, 000 $2, 000).
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