Jade began operations on January 1, 2020. From 2020 to 2022, Jade provided for doubtful accounts based on 5% annual credit sales. On January 1, 2023, Jade charged the method of determining the allowance for doubtful accounts using an aging schedule. In addition, Jade writes off all accounts receivable over 1-year-old. 2023 2022 2021 2020 Credit sales 15,000,000 9,500,000 8,000,000 6,000,000 Collections excluding recovery 11,700,000 8,200,000 6,700,000 4,500,000 Accounts written off during the year 200,000 120,000 80,000 None Recovery of accounts written off 100,000 40,000 35,000 None Amount Probability of collection 30 days or less 3,000,000 95% Between 31 and 60 days 1,500,000 80% Between 61 and 180 days 1,200,000 75% Between 181 and one year 1,200,000 50% Over one year - to be written off 100,000 0% 3) What is the allowance for doubtful accounts on December 31, 2023? A 1,350,000 B. 1,450,000 C. 1250,000 D. 1,000,000 4) What amount should be reported as doubtful account expense for 2023? A. 500,000 B. 600,000 C. 700,000 D. 400,000 5) What is the net realizable value of accounts receivable on December 31, 2023? A 6,900,000 B. 7,000,000 C. 5,550,000 D. 5,650,000
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.
![Use the following information for the next three (3) questions:
Jade began operations on January 1, 2020. From 2020 to 2022, Jade provided for doubtful accounts based on 5% annual
credit sales. On January 1, 2023, Jade charged the method of detemining the allowance for doubtful accounts using an
aging schedule. In addition, Jade writes off all accounts receivable over 1-year-old.
2023
2022
2021
2020
Credit sales
15,000,000
9,500,000
8,000,000
6,000,000
Collections excluding recovery
11,700,000
8,200,000
6,700,000
4,500,000
Accounts written off during the year
200,000
120,000
80,000
None
Recovery of accounts written off
100,000
40,000
35,000
None
Amount
Probability of collection
30 days or less
3,000,000
95%
Between 31 and 60 days
1,500,000
80%
Between 61 and 180 days
1,200,000
75%
Between 181 and one year
1,200,000
50%
Over one year - to be written off
100,000
0%
3) What is the allowance for doubtful accounts on December 31, 2023?
A 1,350,000
B. 1,450,000
C. 1,250,000
D. 1,000,000
4) What amount should be reported as doubtful account expense for 2023?
A. 500,000
B. 600,000
C. 700,000
D. 400,000
5) What is the net realizable value of accounts receivable on December 31, 2023?
A. 6,900,000
B. 7,000,000
C. 5,550,000
D. 5,650,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7a6fa9db-8f40-4745-8d95-de9466351c91%2F6be27a44-957d-43dd-8a4a-060aabbe23cb%2Flz3ck7i_processed.jpeg&w=3840&q=75)
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