in class problem

in class problem - (looks at income statement first and...

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AR beg.= 105000 Allow. For uncollectible accounts = 1950 Sales = 787,500 (80% on credit) Write offs = 3000 1.) Cash 157,500 Accounts receivable 630,000 Sales Revenue 787,500 (to record sales for the period) Allowance for Uncollectible Accounts 3000 Accounts Receivable 3000 (to recognize bad debts) 2.) Based on 3% of net credit sales, prepare the year end adjusting entry to recognize bad debts. (allowance = my estimate…in this, estimate is less than actuality, so understated.) Accounts Receivable Allow. For DA 105,000 3000 1950 63,000 3,000 Bal. 1050 18900 Bal. 732,000 Bal. 17,850 So… Bad Debt Expense = Uncollectibles – allow for DA = BDE 18,900 Allow. For Doubtful Accounts 18,900 3.) Based on 3% of net credit sales, what is the net realizable value of accounts receivable on
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Unformatted text preview: December 31, 2008. (looks at income statement first, and then calculates info for Balance Sheet) AR 732,000 Less: allow. 17,850 NRV = 714,150 4.) If percentage of receivables is used instead of the sales approach what is the adjusting entry If 4% of total accounts receivable is used?(looks at balance sheet first) 4%(732,000) = 29,280 Bad Debts Expense 30,330 Allow. For DA 30,330 Based on 4% of receivables, what is the net realizable value of accounts receivable on December 31, 2008 5.) Bal. Sheet Accounts Receivable 732,000 Less: allow for da 29,280 NRV = 702, 720...
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