(Learning Objective 4: Applying the allowance method to account for uncollectibl

Question

(Learning Objective 4: Applying the allowance method to account for uncollectibles) Use the information from the following journal entries of Turning Leaves Furniture Restoration to answer the questions below: Start with Accounts Receivable's beginning balance ($38,000) and then post to the Accounts Receivable T-account. How much do Turning Leaves Furniture Restoration's customers owe the company at December 31? Start with the Allowance account's beginning credit balance ($12,480) and then post to the Allowance for Uncollectible Accounts T-account. How much of the receivables at December 31 does Turning Leaves Furniture Restoration expect not to collect? At December 31, how much cash does Turning Leaves Furniture Restoration expect to collect on its accounts receivable?

Explanation / Answer

DR Accounts Receivable CR Date Particulars Amounts Particulars Amount 01-Jan To Balance b/d 38000 By Cash 870000 To Sales 1000000 By Allowance for Uncollectible Accounts 12000 31-Dec By Balance c/d 156000 (Amt Due from AR) 1038000 1038000 DR Allowance for Uncollectible Accounts CR Date Particulars Amounts Particulars Amount 01-Jan By Balance b/d 12480 To Accounts Recievable 12000 31-Dec By Uncollectible Account Expense 40000 To Balance c/d 40480 52480 52480 Turning Leaves Furniture Restoration Expect to not Collect $40480 of AR as on 31,Dec Cash Expected to be Collected: Total Cash to be collected from AR 1038000 Less: Amount Expected to not be collected as of Dec,31 -40480 Less: AR Written Off -12000 Cash Expected to be Collected as at 31 Dec 985520

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