Your company prepares financial statements only once a year. In accounting for u

Question

Your company prepares financial statements only once a year. In accounting for uncollectible accounts it uses the allowance method. For the most recent year give general journal entries for the following. Beginning of the year balances:(No journal entries needed for beg. Balances) Accounts Receivable 411,212 Allowance for uncollectible accounts 8,690 Uncollectible Accounts Expense - 1 Sales for the year were 1,662,000. 75% of sales are credit sales 2 Collection on credit sales for the year were 970,000 3 Wrote off 8300 of specific customer accounts 4a At year end estimate uncollectible accts to be 1.25% of credit sales 4b Instead of 4a, the company ages it receivables and estimated 8700 as uncollectible Your company prepares financial statements only once a year. In accounting for uncollectible accounts it uses the allowance method. For the most recent year give general journal entries for the following. Beginning of the year balances:(No journal entries needed for beg. Balances) Accounts Receivable 411,212 Allowance for uncollectible accounts 8,690 Uncollectible Accounts Expense - 1 Sales for the year were 1,662,000. 75% of sales are credit sales 2 Collection on credit sales for the year were 970,000 3 Wrote off 8300 of specific customer accounts 4a At year end estimate uncollectible accts to be 1.25% of credit sales 4b Instead of 4a, the company ages it receivables and estimated 8700 as uncollectible

Explanation / Answer

1. Debit: Accounts receivable 1,246,500 Debit: cash 415,500 Credit: sales revenue 1,662,000 2. Debit: cash 970,000 credit: Accounts receivable 970,000 3. Debit: Allowance for uncollectible accounts 8300 credit: accounts receivable 8300 4a. debit: Uncollectible accounts expense 15,581.25 credit: allowance for uncollectible accounts 15,581.25 4b. debit: uncollectible accounts epxense 8310 credit: allowance for uncollectible accounts 8310 figures: 1. cash = 1662000*.25 AR = 1662000*.75 4a. 1,246,500*.0125 4b. current allowance account = 8690 - 8300 = 390 allowance account needs to increase by 8700 - 390 = 8310

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