Allowance method

Question # 00002812 Posted By: mac123 Updated on: 10/26/2013 01:41 AM Due on: 10/27/2013
Subject Finance Topic Finance Tutorials:
Question
Dot Image
  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.

Dot Image
Tutorials for this Question
  1. Tutorial # 00002619 Posted By: mac123 Posted on: 10/26/2013 01:41 AM
    Puchased By: 2
    Tutorial Preview
    The solution of Allowance method:...
    Attachments
    allowance_method.xlsx (9.17 KB)

Great! We have found the solution of this question!

Whatsapp Lisa