[snowmist69]

I just added 3,211,00 and 60,000 together then subtracted from the 3,722,000 got 441,000 then added that to the balance in A/R at the beginning of course this is without the write off which I don't know about yet.

[Just Looking]

I think you have an addition error there. That comes to $451,0000 not $441,000

Okay, just one thing you are missing. $44,300 of accounts were written off. This means the company decided they were not collectible. It is different from determining the allowance where you are estimating what won't be collected. Here, they are saying that $44,300 in accounts should be zeroed out (removed from a/r) as they won't collect them. Instead of doing this based on percentage, it would involve a detailed look by customer and identifying those specific accounts that will not pay.

Is this making sense to you?

[snowmist69]

Yes that makes sense,I'm adding my head instead of with a caculator. So am I getting any closer.

[Just Looking]

Yes, just tell me what you would do with the $44,300. When you adjust for that, if you do it right, you will get a familiar number - and I'm hoping this will really make sense to you at that point.

[snowmist69]

I know my familiar should be 793,791 but I must have something wrong because I'm not getting that number.

[Just Looking]

What number did you get? PS - you are on the right track.

[snowmist69]

I got 893,341 so I'm off along way

[Just Looking]

You had $893,341 before adjusting for the $44,300. Remember, those are accounts the company specifically identifies to be written off because they won't be collected. What does that do to your $893,341?

[snowmist69]

I don't know if I subtract 43,300 I still do not come up with 793,791 I get 850,041 which is 1000 off my total of balance on my age analysis which was 849,041.

[Just Looking]

You should be using 44,300 not 43,300.

[snowmist69]

OMG thank you so much I have to learn to double check my numbers to make sure I use the correct one. Now if you can tell me what they mean by to prepare an analysis computing the estimated uncollectible accounts I will work on this and you can check my work tom. It's after 1:00 am and I'm tired.

[Just Looking]

Okay, just a review:

442,341 …... Beginning A/R
+3,722,000.…Sales
-3,211,000 .….Collections
-60,000………Returns and Allowances
-44,300………Bad Debts Written Off

=849,041…….. Ending Balance – agrees to your detailed aging


The whole point of this is to make sure you understand the question and the flow of transactions.



Your questions: So this is what I'm suppose to do now.
Compute the end-of year balances(before adjustments) of Accounts Receivable and Allowances for Uncollectible Accounts. You'll work on the Allowance for Uncollectible Accounts next. You have the beginning balance stated in your question. Which of the numbers given would affect it? Why don't you write it similar to what I did above, but it will be much simpler. This will give you the unadjusted balance they are asking for in the question.

Prepare an analysis computing the estimated uncollectible accounts. You have done this already - your $72,114 amount.

Then I figure the estimated uncollectible accounts expense for the year. You are going to compute your current balance and you have already computed your estimated balance. The difference is your current year expense.

Good luck. If you'll attempt this and show your work, I'll look at it tomorrow. Good night. :)

[snowmist69]

Here goes.
43,700 Beginning Allowance
+60,000 Returns and allowances
103,700 ending balance, If I add the write off then I have a toatl of148,000

I should have kept on going last night when I was beginning to understand I know how we did the other just got to get this part.

103,700
-72,114
=31,114 current year expense this is with out the write off
148,000
-72,114
=76,886 this is with the write off. I need to learn if this affects this or not

Just let me know if I'm going in the right directions or if I'm completely off base and thank you for your time and help.

[Just Looking]

Returns and Allowances affect Accounts Receivable and Sales (as Sales Returns and Allowances are deducted from Sales on the Income Statement), not the Allowance for Uncollectible Accounts. Sales Returns occur when customers return defective, damaged, or otherwise undesirable products to the seller. Sales Allowances occur when customers agree to keep such merchandise in return for a reduction in the selling price. Does it make sense to you that this does not affect the Allowance for Uncollectibles? You are looking for the amount in your problem that would have been adjusted to the allowance. When you see that number, give some thought as to how it would affect the allowance. You might reread your textbook regarding the Allowance for Uncollectible Accounts account.

[snowmist69]

I have been reading and it's all confusing I don't even know where to begin. I have a beginning balance of 43,700 then the only thing that I see that would affect the allowance is the write off 44,300. From here I'm lost I can add and have a total of 88,000 but then since I don't understand I'm just guessing.

[Just Looking]

Okay, let me see if I can explain it to you. At the beginning of the year, you had a balance in the Allowance for Uncollectible Accounts of $43,700. That means that (just as you computed the $72,114 figure) at the end of last year they used their experience and formulas to estimate that $43,700 in A/R would not be paid by the customers. It's only an estimate at this time. During the current year, they did an actual analysis by customer and determined that $44,300 should be written off. This means that they specifically identified $44,300 in A/R invoices that would not be received. The entry at this point would be to debit the Allowance and credit the A/R. They would do this by customer so that the aging of A/R would equal the new A/R balance when it was decreased by $44,300. Currently, you have:

$43,700... Beginning Allowance balance
-44,300... A/R written off
=($600)... Ending Allowance balance, prior to adjustment.

In this case, they slightly underestimated the balance. This is nothing unusual in that it is always just an estimate.

You have calculated that you need a balance of $72,114. Given that the current balance is ($600), what do you need to add to the account to have the estimated balance you need?

[snowmist69]

Ok I will work with this and post my answer in a few minutes I want to take my time, thanks for helping me

[snowmist69]

I'm proably wrong but I have done this a couple of ways and the only way I can come up with the balance I need is to add the 72,114 to 44,300 and then I have 116,414. When I then take away the 44,300 I have the balance I need. Is this the correct way or just a wrong way with a correct answer?

[Just Looking]

Try reading my post again. You currently have a negative $600 balance. You want a positive $72,114 balance.

I'm wondering if you put the $44,300 in your last answer twice in error. You are not dealing with the beginning balance of $43,700.

[snowmist69]

I'm stuck,I have read the chapter over and over and there is nothing on how to get a negative balance to be the positive balance I want need it to be. I'm beginning to feel dumb and I know in the end this is going to be so simple.