✓ 1. Estimate of uncollectible accounts, $45,966
Natural Hair Company supplies wigs and hair care products to beauty salons throughout Texas and the Southwest. The accounts receivable clerk for Natural Hair prepared the following aging-of-receivables schedule as of the end of business on December 31, 2012:
Natural Hair Company has a past history of uncollectible accounts by age category, as follows:
Age Class Percent Uncollectible
Not past due 1%
1–30 days past due 2
31–60 days past due 8
61–90 days past due 15
91–120 days past due 35
Over 120 days past due 80
1. Estimate the allowance for doubtful accounts, based on the aging-of-receivables schedule.
2. Assume that the allowance for doubtful accounts for Natural Hair Company has a negative balance of −$3,500 before adjustment on December 31, 2012. Illustrate the effect on the accounts and financial statements of the adjustment for uncollectible accounts.
3. Natural Hair Company reported credit sales of $5,000,000 during 2012. Assume that instead of using the analysis of receivables method of estimating uncollectible accounts, Natural Hair Company uses the percent of sales method and estimates that 1.25% of sales will be uncollectible. Illustrate the effect on the accounts and financial statements of the adjustment for uncollectible accounts using the percent of sales method.
4. Assume that on March 4, 2013, Natural Hair wrote off the $4,350 account of Top Dog Images as uncollectible. Illustrate the effect on the accounts and financial statements of the write-off of the Top Dog Images account.
5. Assume that on August 17, 2013, Top Dog Images paid $4,350 on its account. Illustrate the effect on the accounts and financial statements of reinstating and collecting the Top Dog Images account.
6. Assume that instead of using the allowance method, Natural Hair uses the direct write-off method. Illustrate the effect on the accounts and financial statements of the following:
a. The write-off of the Top Dog Images account on March 4, 2013.
b. The reinstatement and collection of the Top Dog Images account on August 17, 2013.
7. Does Amazon.com use the direct write-off or allowance method of accounting for uncollectible accounts receivable? Explain.
Warren, Carl S. Survey of Accounting, 6th Edition. Cengage Learning, 02/2012. VitalBook file
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more