CALCULATOR MESSAGE HY INSTRUCTOR FULL SCREEN PRINTER VERSION BACK Brief Exercise

Question

CALCULATOR MESSAGE HY INSTRUCTOR FULL SCREEN PRINTER VERSION BACK Brief Exercise 8-10 $16,880 of these receivables will become uncollectible. Prepare the journal entry to record the estimated uncollectibles. (Assume an unadjusted balance of zero in Allowance ations, Indigo Corporation had credit sales of $3,213,200, of which $361,300 remained uncollected at year-end. The credit manager estimates that automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanatiorn Debit Credit SHOWE LIST OF ACCOUNTS

Explanation / Answer

Solution:

Credit Sales = $3,213,200

Uncollected Amount = $361,300

Estimated uncollectible amount = $16,880

Journal Entry to record the estimated uncollectibles

Account Titles and Explanation

Debit

Credit

Bad Debt Expense

$16,880

Allowance for Doubtful Accounts

$16,880

Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable

= $3,213,200 / 273,500

= 11.75

Average Collection Period = 365 days in a year / Accounts Receivable Turnover Ratio

= 365 / 11.75

= 31.1 days

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Account Titles and Explanation

Debit

Credit

Bad Debt Expense

$16,880

Allowance for Doubtful Accounts

$16,880

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