At the beginning of the current period, Rose Corp. had balancesin Accounts Receivable of...

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Accounting

At the beginning of the current period, Rose Corp. had balancesin Accounts Receivable of $200,000 and in Allowance for DoubtfulAccounts of $9,000. During the period, it had credit sales of$800,000 and collections of $763,000. It wrote off as uncollectibleaccounts receivable of $7,300. Uncollectible accounts are estimatedto total $25,000 at the end of the period. (Omit recording cost ofgoods sold.)
Instructions
Record sales and collections during the period.
Record the write-off of uncollectible accounts during theperiod.
Record bad debt expense for the period.
Determine the ending balances in Accounts Receivable andAllowance for Doubtful Accounts.
Assets =
Liab. +
OE
Cash
Gross A/R
Allowance
D/A
n/a
RE
notes
Beg Balance
n/a
200,000
-9,000
n/a
n/a
Sales
Collections
Write off
Bad debt expense
Ending balance
n/a
n/a
n/a
Compare the net realizable value of the receivables at thebeginning to the end of the period.
In comparing the beginning to the end of the period, doesmanagement expect that they will be able to collect a greater orlesser proportion of outstanding receivables? Why?

Answer & Explanation Solved by verified expert

3.8 Ratings (388 Votes)

	Cash	Gross AR	Allowance	Liabilities+	Ret Earnings	Notes
Beg Balance		200000	9000
Sales		800000			800,000	Increases the revenue with sales
Collections	763000	-763000				Cash collected decreases the AR
Write off		-7300	-7300			Reduces both AR and allowance
bad debt expenses			23300		-23,300	Bad debts expenses reduces the balance the net income
Ending balance	763000	229700	25000		776,700


Net realizable value of Accounts receivable:
Accounts receivable (Gross)		229700
Less: Allowance for uncollectble accounts		25000
Accounts receivable (Net)		204700

% of Uncollectible for Gross AR (Beginning ): 9000/200000*100 = 4.50%
% of Uncollectible for Gross AR (Ending ): 25000/229700*100 = 10.88%

Thus, Management expects the lesser collections of outstanding receivables.

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Transcribed Image Text

In: AccountingAt the beginning of the current period, Rose Corp. had balancesin Accounts Receivable of $200,000...At the beginning of the current period, Rose Corp. had balancesin Accounts Receivable of $200,000 and in Allowance for DoubtfulAccounts of $9,000. During the period, it had credit sales of$800,000 and collections of $763,000. It wrote off as uncollectibleaccounts receivable of $7,300. Uncollectible accounts are estimatedto total $25,000 at the end of the period. (Omit recording cost ofgoods sold.)InstructionsRecord sales and collections during the period.Record the write-off of uncollectible accounts during theperiod.Record bad debt expense for the period.Determine the ending balances in Accounts Receivable andAllowance for Doubtful Accounts.Assets =Liab. +OECashGross A/RAllowanceD/An/aREnotesBeg Balancen/a200,000-9,000n/an/aSalesCollectionsWrite offBad debt expenseEnding balancen/an/an/aCompare the net realizable value of the receivables at thebeginning to the end of the period.In comparing the beginning to the end of the period, doesmanagement expect that they will be able to collect a greater orlesser proportion of outstanding receivables? Why?

	Assets =			Liab. +	OE
	Cash	Gross A/R	Allowance D/A	n/a	RE	notes
Beg Balance	n/a	200,000	-9,000	n/a	n/a
Sales
Collections
Write off
Bad debt expense
Ending balance	n/a			n/a	n/a