(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

1) T- Accounts

Accounts Receivable

Turning leaves Furniture customer's owe the company $156,000

2) Allowance for uncollectible accounts

Turning leaves furniture expects $40,480 not to collect

3) Turning leaves expects to collect $115,520 cash ($156,000 - $40,480)

Debit Credit Balance $38,000 - $70,000 1,000,000 12,000 closing balance $156,000

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