William s card shop is planning to expand. Before it expands, the owner wants to

Question

William s card shop is planning to expand. Before it expands, the owner wants to review the uncollectible accounts. William asks you to calculate the percentage of uncollectible accounts per year.


Year


Net Sales


Uncollectible Accounts

Year 1


$ 23,000


$ 800

Year 2


28,750


1,200

Year 3


46,000


1,345

Year 4


52,000


1,150

Instruction:
Calculate the percentage of uncollectible accounts per year.

Part 2 :

Following are the end-of-period account balances for several stationery and office supply companies.

Name of the Companies


Sales


Sales Discount


Sales Returns and allowances


Percentage of Net Sales Uncollectible

Andrews Co


$142,360


$1,423


$936


2

The Book Nook


$209,100


$3,180


$1,139


1

Cable Inc


$173,270


$1,730


$1,540


1

Explanation / Answer

1. year 1: 800/23000 = 3.48% year 2: 1200/28750 = 4.17% year 3: 1345/46000 = 2.92% year 4: 1150/52000 = 2.21% 2. Andrews: (142,360 - 1423 - 936)*0.02 = 2800.02 Book Nook: (209100 - 3180 - 1139)*0.01 = 2047.81 Cable Inc: (173270 - 1730 - 1540)*0.015 = 2550.00 Davis Inc: (65460 - 650 - 690)*0.02 = 1282.40 Ever Sharp: (95085 - 900 - 1035)*0.0125 = 1164.38 Debit: Bad Debt Expense 1282.40 Credit: Allowance for uncollectible accounts 1282.40

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