Question

QUESTION 3 (C8-1)

In the second half of the year for Cocao Here are some transactions from October 1st, 2018 to April 30, 2019:

October 1	Billed City of Windsor for $200,000, the cost of the materials to Cocao is $120,000.
November 10	Received full payment from the City of Windsor
December 9	One Capital sold equipment to TRW Excavating on account for $30,000; the cost to Cocao was $14,000
January 15	Billed Town of Kingsville on account for $80,000, the cost to Cocao was $44,000
March 1	Billed Town of Tecumseh on account for $20,000; the cost to Cocao was $12,000
April 17	Received payment from Town of Kingsville of $65,000

REQUIRED:

1. Complete the following aged listing of customers as of April 30, 2019.

	0 to 30 days	31 to 60 days	61 to 90 days	Over 90 days	Total
Customer
City of Windsor
Town of Kingsville
Town of Tecumseh		$20,000			$20,000
TRW Excavating				$30,000	$30,000

1. Estimate the allowance for Doubtful Accounts required at April 30, 2019, assuming the following uncollectable rates: one month, 1 percent: two months, 5 percent; three months, 20 percent; more than three months, 40 percent.
2. Show how Cocao would report the accounts receivable on its April 30 balance sheet. What amounts would be reported on an income statement prepared for the April 30, 2019 balance sheet?

Answer 1

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Cocao	1 month	2 month	3 month	>3 month	Total	Note
City of Windsor	-	-	-	-	-
Town of Kingsville	-	-	-	15,000.00	15,000.00
Town of Tecumseh	-	20,000.00	-	-	20,000.00
TRW Excavating	-	-	-	30,000.00	30,000.00
Total	-	20,000.00	-	45,000.00	65,000.00	A
Uncollectable rates	1%	5%	20%	40%		B
Allowance for Doubtful Accounts	-	1,000.00	-	18,000.00	19,000.00	C=A*B
Balance sheet- April 30
Accounts Receivable (gross)	65,000.00
Less: Allowance for doubtful account	19,000.00
Accounts Receivable (net)	46,000.00