Work4Me Accounting Simulations. Problem Eleven

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1 Work4Me Accounting Simulations 3 rd Web-Based Edition Problem Eleven Aging Accounts Receivable Page 1

2 INTRODUCTION Log on to Work4Me II and from the Problems Menu Bar, select Problem 11, Aging Accounts Receivable. 1. On the Aging of Accounts Receivable form, click on Print Schedule (Accounts Receivable) and print the document. 2. Click on Print All Customers, and print the Accounts Receivable Subsidiary Ledger. 3. Using the information shown on your printed documents, complete the Aging of Accounts Receivable Form. Completing the Aging of Accounts Receivable Form On the Aging of Accounts Receivable Form, the left-hand columns will show the Customer Account Number, the Name of each customer, and the Current Balance of each customer account. The right hand columns will show the aging columns with titles of Not Yet Due, 1-30 days past due, days past due, days past due, and over 90 days past due. Aging the Receivables 1. The Aging Accounts Receivable schedule below will assist you in determining the age of each individual charge made by each customer. For each customer account, enter the amount of the customer s account that belongs in the appropriate column. Do not use $ signs when entering the amounts. Use the tab bar to move to the appropriate column position, or move the pointer to the location and click. Enter the desired amount and then move to the next location. 2. After aging all of the customer accounts, click on Show Proof. If a row of aging does not add up to the current balance in the customer s account, the Proof Column will show Incorrect. Make the necessary corrections and press Show Proof again. Aging Accounts Receivable Invoices dated December 1 to December 31 Invoices dated November 1 to November 30 Invoices dated October 2 to October 31 Invoices dated September 2 to October 1 Invoices dated September 1 or Earlier Are Not Yet Due Are 1 to 30 Days Past Due Are 31 to 60 Days Past Due Are 61 to 90 Days Past Due Are Over 90 Days Past Due Page 2

Completing the Aging of Accounts Receivable Form On the Aging of Accounts Receivable Form, the left-hand columns will show the Customer Account Number, the Name of each customer, and the Current

3 3. When the amounts in the aging rows are in agreement with the current balances, the Balance column amount and the Proof column amount will appear in green. This proves your amounts are in balance, BUT DOES NOT PROVE that the amounts are in the correct aging locations. 4. For further proof, CHECK to see that totals on the Aging of Accounts Receivable Form match the selected balances listed in the Check It Out box below. If the totals do not match, locate and correct the aging error/s before continuing. 5. When your totals match the Check It Out box, you are ready to print the Aging of Accounts Receivable Form. Click on Print Aging and when the print box appears, first select Preference, then select Landscape, and print the document CHECK IT OUT Current balance of Accounts Receivable $50, Balance of accounts that are current, 1-30 days 33, Balance of accounts that are Over 90 Days 2, Estimated Uncollectible Account Amount For Accounts that are Days Old Aging Schedule Total Estimate of Uncollectible 2, Accounts For The Period Saving Your Work After completing and printing the Aging of Accounts Receivable Form, click on Save. If, for any reason, you wish to recall the schedule later, your work will appear as it was previously saved. You must Save the Data in order to complete the examination for this problem. Starting Over Should you want to start over, and reenter all of the aging data, click on Clear. If you complete new work and you want to save this work, be sure to click on Save or any previous work will be unchanged and will appear the next time you select Problem 11 Aging Accounts Receivable. Use your correct Aging of Accounts Receivable Form to answer the Analysis Questions for Problem 11. Page 3

For further proof, CHECK to see that totals on the Aging of Accounts Receivable Form match the selected balances listed in the Check It Out box below.

4 WORK4ME - PROBLEM 11 AGING ACCOUNTS RECEIVABLE NAME CLASS DAY AND TIME DATE 1. Using the Aging Form and Allowance Method, if the current balance of the Allowance for Doubtful Accounts account is a credit balance of $135.00, what will be the balance of the Allowance account after the adjusting entry for bad debts expense? A. $2, B. $2, C. $2, D. $2, After the adjusting entry for the bad debt expense, what will be the total for net accounts receivable? A. $48, B. $47, C. $45, D. $44, On your Aging of Accounts Receivable Form, what amount of estimated uncollectible accounts is attributed to accounts that are days? A. $ B. $ C. $ D. $ If the current balance of the Allowance for Doubtful Accounts is a credit balance of $270.00, what will be the balance of the Allowance account after the adjusting entry for bad debts expense? A. $1, B. $1, C. $2, D. $2, If the current balance of Allowance for Doubtful Accounts is a debit balance of $330.00, what amount will be required in the adjusting entry to bring the allowance account credit balance to $2,148.94? A. $2, B. $2, C. $1, D. $1, Page 4

00, what will be the balance of the Allowance account after the adjusting entry for bad debts expense? A. $2,462.45 B. $2,392.94 C. $2,283.94 D. $2,148.94 2.

5 WORK4ME - PROBLEM If the percentages for the Aging of Accounts Receivable Form are changed (from left to right) to 2%, 10%, 50%, and 100%, what will be the new estimated uncollectible account balance on the Aging Schedule? A. $2, B. $2, C. $2, D. $2, If the bad debt expense is calculated at 3% on net credit sales of $450,600, (also called income statement method), what will be the amount of the adjusting entry for bad debt expense if the current balance of the Allowance for Doubtful Accounts is a credit balance of $1,400? A. $14, B. $13, C. $12, D. None of the above 8. Check your printout of all customer balances and determine by customer number, which customer has been making the strongest effort to pay a past-due account balance? A. #10670 B. #11220 C. #11460 D. # When using the Allowance Method of accounting for Bad Debts, what is the correct journal entry that would be used to write off a customer account as uncollectible? A. Debit Bad Debt Expense and Credit Allowance for Doubtful Accounts B. Debit Allowance for Doubtful Accounts and credit Accounts Receivable C. Debit Accounts Receivable and credit Allowance for Doubtful Accounts D. Debit Bad Debt Expense and credit Accounts Receivable. Page 5

Schedule? A. $2,765.41 B. $2,402.41 C. $2,302.41 D. $2,212.41 7.

6 WORK4ME - PROBLEM When the Direct Write-off Method is used by a business to account for Bad Debts, what adjusting entry for the bad debts is recorded at the end of each accounting period? A. Debit Bad Debts Expense and credit Allowance for Doubtful Accounts B. Debit Accounts Receivable and credit Allowance for Doubtful Accounts C. Debit Allowance for Doubtful Accounts and credit Accounts Receivable D. There is no adjusting for bad debts when the direct write-off method is used Page 6

recorded at the end of each accounting period? A. Debit Bad Debts Expense and credit Allowance for Doubtful Accounts B.

Accounting for Bad Debts. Objectives. Doubtful Accounts. Created 2009 By Michael Worthington Elizabeth City State University

Accounting for Bad Debts. Objectives. Doubtful Accounts. Created 2009 By Michael Worthington Elizabeth City State University Accounting for Bad Debts Created 2009 By Michael Worthington Elizabeth City State University Objectives Define uncollectible accounts and writing-off bad debts Prepare journal entries for the Direct Method