Chapter 1 Problem 5-19
2005 2006 2007 Total
1. Writeoff 26,000 29,000 30,000 85,000
Less: Recoveries 2,000 3,000 4,000 9,000
Net writeoff 24,000 26,000 26,000 76,000
76,000
Percentage to be used in computing the allowance = ------------------- = 2%
3,800,000
2. Credit sales for 2008 3,000,000
Multiply by bad debt percentage 2%
Provision for doubtful accounts 60,000
3. Accounts receivable – January 1, 2008 250,000
Add: Credit sales for 2008 3,000,000
Recoveries 5,000 3,005,000
Total 3,255,000
Less: Collections in 2008 2,615,000
Writeoff 40,000 2,655,000
Accounts receivable – December 31, 2008 600,000
4. Allowance for doubtful accounts – January 1 20,000
Add: Doubtful accounts for 2008 60,000
Recoveries 5,000 65,000
Total 85,000
Less: Writeoff 40,000
Allowance for doubtful accounts – December 31 45,000
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