ACCOUNTS RECEIVABLE Problem 1: Contra-Revenues and Other Issues Record the following transactions: 1. Sold goods with a selling price of $1,000 and cost of $750 with terms FOB Shipping Point, 2/10, n/30. 2. Goods in #2 arrived at buyers. 3. Buyer in #1/#2 paid within the discount period. 4. Sold goods with a selling price of $500 and cost of $275 with terms FOB Destination 2/10,n/30. Goods were shipped immediately. 5. Goods in #4 arrived at buyers. 6. Goods in #4/#5 were returned. They were undamaged and in salable condition. 7. Sold goods with a selling price of $5800 and cost of $3,600 with terms FOB Destination 2/10,n/30. Goods were shipped immediately. 8. Goods in #7 arrived at buyers but arrived 2 days late negatively impacting the buyers manufacturing process. 9. Customer in #8 received a $500 credit on his purchase. Goods were shipped immediately. The customer complained.... a lot.
ACCOUNTS RECEIVABLE Problem 1: Contra-Revenues and Other Issues Record the following transactions: 1. Sold goods with a selling price of $1,000 and cost of $750 with terms FOB Shipping Point, 2/10, n/30. 2. Goods in #2 arrived at buyers. 3. Buyer in #1/#2 paid within the discount period. 4. Sold goods with a selling price of $500 and cost of $275 with terms FOB Destination 2/10,n/30. Goods were shipped immediately. 5. Goods in #4 arrived at buyers. 6. Goods in #4/#5 were returned. They were undamaged and in salable condition. 7. Sold goods with a selling price of $5800 and cost of $3,600 with terms FOB Destination 2/10,n/30. Goods were shipped immediately. 8. Goods in #7 arrived at buyers but arrived 2 days late negatively impacting the buyers manufacturing process. 9. Customer in #8 received a $500 credit on his purchase. Goods were shipped immediately. The customer complained.... a lot.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
100%
Part 1: Prepare
Part 2: Accounting for
- Prepare T-Accounts for A/R; Allowance for Doubtful Accounts and Bad Debt Expense
- Put beginning balances that are given in these accounts.
- Record Journal Entries for Current Year Activity
- Post the JEs Activity to T-accounts above.
- Prepare
Adjusting Journal Entries for "a" and "b" based on the assumptions given in "a" and "b" - Indicate the following information that would appear on the financial statements under "a" and "b"
Accounts Receivable - Allowance for Doubtful Accounts
- Net realizable A/R --- (just subtract the two above)
- Bad Debt Expense
Thank you
Transcribed Image Text:ACCOUNTS RECEIVABLE
Problem 1: Contra-Revenues and Other Issues
Record the following transactions:
1. Sold goods with a selling price of $1,000 and cost of $750 with terms FOB Shipping Point,
2/10, n/30. Goods were shipped immediately.
2. Goods in #2 arrived at buyers.
3. Buyer in #1/#2 paid within the discount period.
4. Sold goods with a selling price of $500 and cost of $275 with terms FOB Destination
2/10,n/30. Goods were shipped immediately.
5. Goods in #4 arrived at buyers.
6. Goods in #4/#5 were returned. They were undamaged and in salable condition.
7. Sold goods with a selling price of $5800 and cost of $3,600 with terms FOB Destination
2/10,n/30. Goods were shipped immediately.
8. Goods in #7 arrived at buyers but arrived 2 days late negatively impacting the buyers
manufacturing process.
9. Customer in #8 received a $500 credit on his purchase.
The customer complained..... a lot.
Problem 2: Accounting for Bad Debts:
The following is selected account information and activity for the year ended 12/31/19:
Beginning Account Balances
1/1/19 Accounts Receivable $60,000
1/1/19 Allowance for Doubtful Accounts $2,000
2019 Activity
Sales on account - $800,000
Cash collections of $740,000 net of $12,000 in sales discounts
Sales returns totaled $30,000
Sales allowances totaled $10,000
Accounts receivable written-off as uncollectible totaled $2,800
Required Use the information above to calculate bad debts expense under the two following
mutually exclusive and independent assumptions:
a. A review of 12/31/19 subsidiary accounts receivable indicated that $3,000 was estimated to be
uncollectible.
b. Bad debts are estimated to run at 0.5% of sales based on historical data adjusted for current credit
granting and collection procedures.
For each of the above (a., b.) mutually exclusive and independent assumptions:
Prepare the appropriate adjusting journal entry.
Indicate the financial statement presentation:
Net Accounts Receivable for the year-ended 12/31/19.
2019 Bad Debts Expense
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