Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. the femaware company uses the allowance method to

The Femaware Company uses the allowance method to account for bad debts. At the beginning of...

60.1K

Verified Solution

Question

Accounting

The Femaware Company uses the allowance method to account forbad debts. At the beginning of year 1, the allowance account had acredit balance of $66,844. Credit sales for year 1 totaled$2,139,000 and the year end accounts receivable balance was$436,713. During this year, $65,061 in receivables were determinedto be uncollectible. Femaware anticipates that 4% of all creditsales will ultimately become uncollectible. The fiscal year ends onDecember 31.

Required:

1. Does this situation describe a loss contingency? Explain.

2. What is the bad debt expense that Femaware should report inits year 1 income statement?

3. Prepare the appropriate journal entry to record thecontingency.

4. What is the net realizable value (book value) Femaware shouldreport in its year 1 balance sheet?

Answer & Explanation Solved by verified expert
3.8 Ratings (375 Votes)
Answer 1 Yes Farmaware Makes 4 of Credit Sales as Doubtful Debts and 65061 becomes actually bad Here is Contingency Loss of 85560 ie 4 of Credit Sales 42139000 Answer2 Bad Debts Expenses is 4 of Credit Sales 42139000 ie85560 should be reported in year 1 income statement Answer3 the    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Which concept would you use to explain why investment spending did not grow strongly between 2011...

Economics
Q

PC/PW < aLC/aLW What the reasoning/meaning behind the idea on how the economy will specialize in the production...

Economics
Q

Which criterion must be applied to determine the ideal facilities plan?

Civil Engineering
Q

4 Are your data consistent with the consensus explanation for the effect on membran permeability...

Biology
Q

6 Suppose in a double slit experiment with a light of wavelength 600 nm separation...

Physics
Q

A random sample was taken to determine the left foot length of female bears based...

Basic Math
Q

b The graph of y g x is shown Draw the graph of y g...

Calculus
Q

23 Question 10 of 10 0.53/1 Ivanhoe Roofing is faced...

Accounting
Q

roblem 3-5A (Algo) Applying the accounting cycle LO...

Accounting
Q

pww foods incorporated was formed in 2015 with the merger of boyd companies and b&h...

Accounting
Q

e effect on operating income if absorption costing is used rather than variable costing would...

Accounting
Q

I need help with both parts please and thank you. value (NPV) and...

Accounting