Accounts receivable balance on 1 January 2015 is 400. Impairment for doubtful accounts receivable balance on 1 January 2015 is 40. During 2015 sales…

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November 26, 2020
Can you help with the following? Read the parable of the Prodigal Son (Luke 15:11-32) and answer the following questions: What do you believe is the
November 26, 2020

Accounts receivable balance on 1 January 2015 is £400.

2. Impairment for doubtful accounts receivable balance on 1 January 2015 is £40.

3. During 2015 sales were £3,000. Eighty percent of the sales were credit sales. Sales

return in respect of credit sales were £100. There were no returns in respect of cash

sales.

4. Cash collected on accounts receivables during 2015 was £1,000.

5. Accounts receivable written-off as bad debt expenses during 2015 were £30. The

written-off accounts receivable had been considered doubtful as of the end of 2014.

Required:

a. Record the write-off of uncollectible bad debt during 2015.

b. Calculate the impairment for doubtful accounts receivable and record the

appropriate accounting entry on 31 December 2015 for each of the following

independent assumptions:

(i)The end of year balance of the impairment for doubtful accounts is based on the

ending balance of accounts receivable. The accountant of the Conett Company

estimates, from past experience, that 10% of the 31 December 2015 accounts

receivable will prove to be doubtful.

(ii)The end of year balance of the impairment for doubtful accounts is based on net

credit sales. The accountant estimates that 5% of the net credit sales will prove to

be doubtful.

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Accounts receivable balance on 1 January 2015 is 400. Impairment for doubtful accounts receivable balance on 1 January 2015 is 40. During 2015 sales… was first posted on November 26, 2020 at 2:37 pm.
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