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ACCT101-Handout06 - c The balance in Allowance for doubtful...

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Acct 101 L12, L13, L16 Handout #06 Sales Revenue, Receivables, and Cash Revenue recognition FOB shipping point FOB destination Sales discounts : to encourage prompt payment of accounts receivable 2/10, n/30 Sales returns and allowance E 6-2 1
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Acct 101 L12, L13, L16 Handout #06 Accounts receivable and bad debts Methods of estimating bad debts Percentage of credit sales method : Bad debts = a % of credit sales uncollectible Aging of accounts receivable method : Ending allowance = a % of aged A/R that is uncollectible You have the following information for ABC Co: a. Sales for 2007: $3,800,000 (credit sales: 75%) b. The balance in Accounts receivable on Dec. 31, 2007: $920,000 ($400,000— not yet due; $300,000— 90 days past due; the rest—over 90 days past due.)
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