E6-18 (Algo) Inferring Bad Debt Write-Offs and Cash Collections from Customers LO6-2 On its recent financial statements, Hassell Fine Foods reported the following information about net sales revenue and accounts receivable (amounts in thousands) : Current Year Prior Year Accounts receivable, net of allowances of $183 and $147 $ 13,889 $ 11,638 Net sales revenue 61,170 51,872 According to its Form 10-K, Hassell recorded bad debt expense of $94 and there were no bad debt recoveries during the current year. (Hint: Refer to the summary of the effects of accounting for bad debts on the Accounts Receivable (Gross) and the Allowance for Doubtful Accounts T-accounts. Use the T-accounts to solve for the missing values.) Required: 1. What amount of bad debts was written off during the current year? 2. Based on your answer to requirement (1), solve for cash collected from customers for the current year, assuming that all of Hassell's sales during the period were on open account.

Question

Solomon

Business

6 July, 06:27

E6-18 (Algo) Inferring Bad Debt Write-Offs and Cash Collections from Customers LO6-2 On its recent financial statements, Hassell Fine Foods reported the following information about net sales revenue and accounts receivable (amounts in thousands) : Current Year Prior Year Accounts receivable, net of allowances of $183 and $147 $ 13,889 $ 11,638 Net sales revenue 61,170 51,872 According to its Form 10-K, Hassell recorded bad debt expense of $94 and there were no bad debt recoveries during the current year. (Hint: Refer to the summary of the effects of accounting for bad debts on the Accounts Receivable (Gross) and the Allowance for Doubtful Accounts T-accounts. Use the T-accounts to solve for the missing values.) Required: 1. What amount of bad debts was written off during the current year? 2. Based on your answer to requirement (1), solve for cash collected from customers for the current year, assuming that all of Hassell's sales during the period were on open account.

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Answers (1)

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Yadiel Schroeder · Answer 1

1. What amount of bad debts was written off during the current year?

Allowance for Doubtful Accounts

$ 147 Credit

$ 94 Credit

$ 58 Debit

$ 183 Credit Balance

Dr Allowance for Uncollectible Accounts $ 58

Cr Accounts Receivable Net $ 58

2. Based on your answer to requirement (1), solve for cash collected from customers for the current year

Accounts Receivable

$ 11.785 Debit

$ 61.170 Debit

$ 58 Credit

$ 58.825 Credit

$ 14.072 Debit Balance

Explanation:

To know the amount that was written off during the current year, it's necessary to take the balance of the prior year and add the amount recorded as bad debt during the year, with these we calculate the amounts of difference between the balance of the current year and these values, the amount it's the value written-off during the current year.

Hassell recorded bad debt expense of $94 and there were no bad debt recoveries during the current year.

Dr Bad Debt Expense $ 94

Cr Allowance for Uncollectible Accounts $ 94

1. What amount of bad debts was written off during the current year?

Allowance for Doubtful Accounts

$ 147 Credit

$ 94 Credit

$ 58 Debit

$ 183 Credit Balance

Dr Allowance for Uncollectible Accounts $ 58

Cr Accounts Receivable Net $ 58

2. Based on your answer to requirement (1), solve for cash collected from customers for the current year

With these value calculated we can know find the total amount collected during the year, as previously done, we apply the same procedure to find the amount, we know the movements done during the current year and by difference we find the total value collected.

Accounts Receivable

$ 11,785 Debit

$ 61,170 Debit

$ 58 Credit

$ 58,825 Credit

$ 14,072 Debit Balance

Dr Cash $ 58.825

Cr Accounts Receivable Net $ 58.825