Aging MethodOn January 1, 2019, Hungryman Inc. has the following balances foraccounts receivable and allowance for doubtful accounts: Accounts Receivable $1,280,000Allowance for Doubtful Accounts (a credit balance) 44,000During 2019, Hungryman had $18,500,000 of credit sales, collected $17,945,000 of accounts receivable, and wrote off $60,000 of accountsreceivable as uncollectible. At year end, Hungryman performs an agingof its accounts receivable balance and estimates that $52,000 will beuncollectible. Required:1. Calculate Hungryman's preadjustment balance in accounts receivableon December 31 , 2019. 2. Calculate Hungryman's preadjustment balance in allowance fordoubtful accounts on December 31, 2019.3. Prepare the necessary adjusting entry for 2019.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Aging Method
On January 1, 2019, Hungryman Inc. has the following balances for
accounts receivable and allowance for doubtful accounts:
Accounts Receivable $1,280,000
Allowance for Doubtful Accounts (a credit balance) 44,000
During 2019, Hungryman had $18,500,000 of credit sales, collected $17,945,000 of accounts receivable, and wrote off $60,000 of accounts
receivable as uncollectible. At year end, Hungryman performs an aging
of its accounts receivable balance and estimates that $52,000 will be
uncollectible.
Required:
1. Calculate Hungryman's preadjustment balance in accounts receivable
on December 31 , 2019.
2. Calculate Hungryman's preadjustment balance in allowance for
doubtful accounts on December 31, 2019.
3. Prepare the necessary
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
