Accounting – Receivables

See attached file

[Typethe document title]

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Scenario:

You are the Accountant for WanneBee Corporation

WannaBee Corporation has $1,500,000 of Receivables on December 31, 2000. WannaBee uses the Allowance Method and historical data indicates that 7% of receivables become uncollectible. The end of year balance in the ADA is 0.

The following are the 2000 end of year receivables.

AR- Goodboy $25,000 AR-NannyNancy $250,000

AR-BusyBody $75,000 AR-AlphaBetCo $130,000

AR-DippyDo $55,000 AR-TipsyTurvy $98,000

AR-MerryMen $145,000 AR-HappyHart $289,000

AR-CurlyCues $211,000 AR-MityMan $47,000

AR-PrettyPenny $109,000 AR-JumpingJax $66,000

During 2001 the following events occurred:

Goodboy defaulted.

BusyBody declared bankruptcy but paid $19,000.

DippyDo paid the account in full.

MerryMen still owes $48,000.

CurlyCues has not answered the phone for 8 months.

PrettyPenny paid its account.

NannyNancy paid $150,000 and on November 21 made a 120 note at 4% APR for the remainder.

AlphaBetCo paid its account in full.

TipsyTurvy has closed its business.

HappyHart paid its bill.

MityMan still owes its account.

JumpingJax paid ½ its bill and will not pay the rest.

The Receivables balance at the end of the year is $2,235,000

Assignments:

(1) Prepare the Required AJE for December 31, 2000.

(2) Prepare the Required AJE for December 31, 2001.

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