Compute The Amount Of Allowance For Uncollectible Accounts To Be Reported In The Balance Sheet Of V Company V Company Case Study

E8-8
Requirement:
Compute the amount of allowance for uncollectible accounts to be reported in the balance sheet of V company:
Estimated Uncollected Accounts
Details Total Amount
($) Percentage Considered Uncollectible
(%) Allowance for Doubtful Debts Accounts
($)
A B C D
0 – 30 Days Past Due 60,000 5% 3,000
31 – 60 Days Past Due 4,000 10% 400
Over 60 Days Past 2,000 70% 1,400
Total 66,000 4,800

Therefore, the amount of allowance for uncollectible accounts to be reported in the balance sheet of V Company is $4,800.
E8-11
1. Compute the rates of increase in sales and accounts receivable during 2015 and 2016: Previous Year 2014($) Cost of Year 2015($) Change ($) C – H Change Rate (%) Previous Year 2015 ($) Current Year 2016 ($) Change ($) Change
The growth rate of sales (3%) and accounts receivable (3.5%) in the year 2015 are almost equal. Hence, the accounts receivables and the sales of 2015 have no potential problems.
On the other hand, there is a huge difference between the growth rate of sales (8%) and accounts receivable (17.2%) in the year 2016. Hence, the accounts receivables and the sales 2015 have some potential problems.

3. Explanation of potential reasons:
• The sales and accounts receivables are increased in the year 2016 in comparison to
Journal Entry
Date Account Title and Explanation Post Ref Debit ($) Credit ($) Recourse Liability 4,000 Cash 8,000 Due from factor 10,500 Gain on sale of receivables 1,500 (To record the receipt of cash)

P8-4
1. Journal Entry
Date Account Title and Explanation Post Ref Debit ($) Credit ($) Account Receivable (A+) 8,200,000 Sales Revenue (E+) 8,200,000 Cash (A+) 7,975,000 Accounts Receivable 7,975,000 Allowance for Uncollectible (A+) 85,000 Accounts Receivable (A-) 85,000

2. Allowance for Uncollectible Accounts
Date Details Debit (S) Date Details Credit ($) Accounts Receivable (Written off) 85,000 Beginning Balance 25,000 Closing Balance 93,060 Bad Debt provision (1) 82,000 Bad debt provision (adjustment) 71,060 Total 178,060 Total 178,060 Balance 93,060

3.
Date Account Title and Explanation Post Ref Debit ($) Credit ($) Bad Debt Provision (E-_