Allowance method:

Question # 00000035 Posted By: Withyou Updated on: 02/21/2013 05:25 AM Due on: 06/30/2013
Subject Accounting Topic Accounting Tutorials:
Question
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  1. Allowance method: Income statement and balance sheet
    approaches.
    Tempe
    Company reported accounts receivable of $300,000 and an allow­ance for
    uncollectible accounts of $31,000 (credit) on the December 31, 19X2, balance
    sheet. The following data pertain to 19X3 activities and operations:


Sales
on account



$2,000,000



Cash
collections from credit customers



1,600,000



Sales
discounts



50,000



Sales
returns & allowances



100,000



Uncollectible
accounts written off



29,000



Collections
on accounts that were previously written off



2,700


Instructions

  1. Prepare journal entries to
    record the sales- and receivables-related trans­actions from 19X3.
  2. Prepare the December 31,
    19X3, adjusting entry for uncollectible ac­counts assuming that uncollectibles
    are estimated to be 2% of net credit sales.
  3. Prepare the December 31,
    19X3, adjusting entry for uncollectible ac­counts assuming that uncollectibles
    are estimated at 1% of year-end accounts receivable.
  4. Compute the amount of the
    adjusting entry in part (c) assuming that $46,000, rather than $29,000, of
    accounts were written off in 19X3.
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Tutorials for this Question
  1. Tutorial # 00290883 Posted By: ACCOUNTS_GURU Posted on: 05/25/2016 08:03 AM
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