This company prepares financial statements only once a year. In accounting for u
ID: 2371169 • Letter: T
Question
This 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 begenning
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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