{"id":191666,"date":"2025-02-15T09:55:15","date_gmt":"2025-02-15T09:55:15","guid":{"rendered":"https:\/\/learnexams.com\/blog\/?p=191666"},"modified":"2025-02-15T09:55:18","modified_gmt":"2025-02-15T09:55:18","slug":"calistoga-produce-estimates-bad-debt-expense-at-0-50-of-credit-sales-2","status":"publish","type":"post","link":"https:\/\/www.learnexams.com\/blog\/2025\/02\/15\/calistoga-produce-estimates-bad-debt-expense-at-0-50-of-credit-sales-2\/","title":{"rendered":"Calistoga Produce estimates bad debt expense at 0.50% of credit sales"},"content":{"rendered":"\n

Calistoga Produce estimates bad debt expense at 0.50% of credit sales. The company reported accounts receivable and allowance for uncollectible accounts of $473,000 and $1,520 respectively, at December 31, 2020. During 2021, Calistoga’s credit sales and collections were $326,000 and $312,000, respectively, and $1,810 in accounts receivable were written off. \u00c3\u201a\u00c2 What is Calistoga’s final balance in its allowance for uncollectible accounts at December 31, 2021?
Calistoga Produce estimates bad debt expense at 0.50% of credit sales. The company reported accounts receivable and allowance for uncollectible accounts of $473,000 and $1,520 respectively, at December 31, 2020. During 2021, Calistoga’s credit sales and collections were $326,000 and $312,000, respectively, and $1,810 in accounts receivable were written off.<\/p>\n\n\n\n

\u00c3\u201a\u00c2<\/p>\n\n\n\n

What is Calistoga’s final balance in its allowance for uncollectible accounts at December 31, 2021?<\/p>\n\n\n\n

The Correct Answer and Explanation is :<\/strong><\/mark><\/p>\n\n\n\n

To calculate Calistoga Produce’s final balance in its allowance for uncollectible accounts at December 31, 2021, we need to follow these steps:<\/p>\n\n\n\n

1. Determine Bad Debt Expense for 2021<\/strong><\/h3>\n\n\n\n

The company estimates its bad debt expense at 0.50% of credit sales. We are given the credit sales for 2021 as $326,000.<\/p>\n\n\n\n

Bad Debt Expense<\/strong> = 0.50% of $326,000 = 0.005 \u00d7 $326,000 = $1,630<\/p>\n\n\n\n

2. Determine the Ending Balance of Allowance for Uncollectible Accounts<\/strong><\/h3>\n\n\n\n

The allowance for uncollectible accounts will be affected by the following:<\/p>\n\n\n\n

    \n
  • The beginning balance<\/strong> of the allowance account (given as $1,520).<\/li>\n\n\n\n
  • The bad debt expense<\/strong> recorded for 2021 ($1,630).<\/li>\n\n\n\n
  • The write-offs<\/strong> during the year ($1,810). The formula to calculate the ending balance of the allowance for uncollectible accounts is: [
    \\text{Ending Balance of Allowance} = \\text{Beginning Balance} + \\text{Bad Debt Expense} – \\text{Write-offs}
    ] Substituting the known values:
    [
    \\text{Ending Balance of Allowance} = 1,520 + 1,630 – 1,810
    ]
    [
    \\text{Ending Balance of Allowance} = 1,340
    ]<\/li>\n<\/ul>\n\n\n\n

    3. Final Answer<\/strong><\/h3>\n\n\n\n

    The final balance in the allowance for uncollectible accounts at December 31, 2021, is $1,340<\/strong>.<\/p>\n\n\n\n

    Explanation:<\/h3>\n\n\n\n

    The allowance for uncollectible accounts is adjusted by estimating the bad debt expense based on credit sales and accounting for actual write-offs. The bad debt expense is added to the allowance balance, and write-offs reduce it. As a result, the final allowance balance reflects the estimated uncollectible portion of the accounts receivable as of December 31, 2021.<\/p>\n\n\n\n

    I’ll also generate a visual breakdown of these calculations.<\/p>\n\n\n\n

    Here\u2019s the visual breakdown of the calculation for Calistoga Produce\u2019s allowance for uncollectible accounts. It shows the initial balance, the bad debt expense, the write-offs, and the resulting ending balance of $1,340 at December 31, 2021.<\/p>\n\n\n\n

    This illustration helps clarify how each component affects the final balance in the allowance account. Let me know if you need further clarification or assistance!<\/p>\n\n\n\n

    \"\"<\/figure>\n","protected":false},"excerpt":{"rendered":"

    Calistoga Produce estimates bad debt expense at 0.50% of credit sales. The company reported accounts receivable and allowance for uncollectible accounts of $473,000 and $1,520 respectively, at December 31, 2020. During 2021, Calistoga’s credit sales and collections were $326,000 and $312,000, respectively, and $1,810 in accounts receivable were written off. \u00c3\u201a\u00c2 What is Calistoga’s final […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-191666","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/191666","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=191666"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/191666\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=191666"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=191666"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=191666"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}