--%>
Assignment Help - homework help

What is the opening accounts receivable balance

Big Problem Ltd., an oil refining business uses an allowance system to account for bad debts. At the beginning of the year the allowance had a credit balance of $16,000. The following transactions took place during the year.

a) Total sales of $1,200,000 were recorded during the year; 90% of which were credit sales.

b) Accounts receivable collections totaled $900,000. The closing accounts receivable balance was $380,000

c) Accounts receivable totaling $48,500 were written off during the year.

d) Bonita Ltd., which owed $6,000, was one of the accounts that were written off in c)

above. Bonita subsequently paid $4,000. This $4,000 is not included in the cash collections of $900,000.

e) Big Problem estimates that 8.00% of their ending accounts receivable will be uncollectible.

Required -

a) What is the opening accounts receivable balance?

b) Based on the ending accounts receivable balance and all of the above information still holding true, by what amount should the allowance account be adjusted?

c) Assume now that BP estimates that bad debt expense should be 4.2% of credit sales. If items a through d from above are still true, what would be the balance of the allowance account at year end?

   Related Questions in Financial Accounting

  • Q : Legal Reasoning and Writing This

      This exercise does not require you to do any research, and does not require you to cite to any references or external materials.  Do not include any constitutional arguments. Like many legal and policy questions

    		•
  • Q : Define Income Statement How to do

    How to do income statement = from the revenues we will deduct all the expenses related to that period to get the income or loss. When the revenues are more than the expenses then it is income and when the expenses are more than the revenues then it is

    		•
  • Q : Fundamenetal Issues on Management

    1.  Somerset Ltd manufactures components for the motor industry. In one of its workshops it has three workers, Joe, Jack and Jonny, who at any one time work on batches of the same component. The standard time allowed to produce one unit is one hour. The workers rate of pay is

    		•
  • Q : Meaning of Electronic Fund Transfer

    What is the meaning of Electronic Fund Transfer. Briefly describe it.

    		•
  • Q : Causes of decreasing of Gross profit

    What are the various causes of decreasing of Gross profit margin?

    		•
  • Q : Effects of foreigners portfolio

    Since early 1980s, foreign portfolio investors has purchased a considerable portion of the U.S. treasury bond issues.  Explain some short-term and long-term effects of the foreigners’ portfolio investment over the U.S. balance of payments.

    		•
  • Q : Issuing dual currency bonds What

    What borrower must consider before issuing the dual currency bonds?

    		•
  • Q : Investment approach of Lynch Investment

    Investment approach of Lynch: Peter Lynch, the best known mutual fund manager, also adopts the words of Benjamin Graham in the sense that he looks at companies not from the perspective of how the stock prices move

    		•
  • Q : European term bid-ask quotes Restate

    Restate following one-, three-, and six-month outright forward European term bid-ask quotes in forward points. Spot               1.3431-1.3436

    Q : Define Margin Improvement Margin

    Margin Improvement: Margins in the business remained beneath pressure, even previous to the economic downturn for the industry as an entire, returns on capital have continued under the cost of capital. Previous to the falls in the second half of the y

    		•