Balances January 1, current year Accounts receivable (various customers) Allowance for doubtful accounte $ 119,000 6,000 In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 3/10, n/30 (assume a unit sales price of $900 in all transactions). Transactions during current year a. Sold merchandise for cash, $236,000. b. Sold merchandise to R. Smith; invoice price, $1,500. c. Sold merchandise to K. Miller; invoice price, $27,000. d. Two days after purchase date, R. Smith returned one of the units purchased in (b) and received account credit. e. Sold merchandise to B. Sears; invoice price, $25,000. f. R. Smith paid his account in full within the discount period. g. Collected $98,000 cash from customer sales on credit in prior year, all within the discount periods. h. K. Miller paid the invoice in () within the discount period. 1. Sold merchandise to R. Roy, Invoice price, $20,500. J. Three days after paying the account in full, K. Miller returned seven defective units and received a cash refund. k. After the discount period, collected $6,000 cash on an account receivable on sales in a prior year. 1. Wrote off a prior year account of $4,000 after deciding that the amount would never be collected. m. The estimated bad debt rate used by the company was 1.0 percent of credit sales net of returns. Required: 1. Using the following categories, indicate the effect of each listed transaction, including the write-off of the uncollectible account the adjusting entry for estimated bad debts (ignore cost of goods sold). The first transaction is used as an example. (Round your answers to the nearest whole dollar amount. Any decrease in account balances should be indicated by a minus sign.)
Balances January 1, current year Accounts receivable (various customers) Allowance for doubtful accounte $ 119,000 6,000 In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 3/10, n/30 (assume a unit sales price of $900 in all transactions). Transactions during current year a. Sold merchandise for cash, $236,000. b. Sold merchandise to R. Smith; invoice price, $1,500. c. Sold merchandise to K. Miller; invoice price, $27,000. d. Two days after purchase date, R. Smith returned one of the units purchased in (b) and received account credit. e. Sold merchandise to B. Sears; invoice price, $25,000. f. R. Smith paid his account in full within the discount period. g. Collected $98,000 cash from customer sales on credit in prior year, all within the discount periods. h. K. Miller paid the invoice in () within the discount period. 1. Sold merchandise to R. Roy, Invoice price, $20,500. J. Three days after paying the account in full, K. Miller returned seven defective units and received a cash refund. k. After the discount period, collected $6,000 cash on an account receivable on sales in a prior year. 1. Wrote off a prior year account of $4,000 after deciding that the amount would never be collected. m. The estimated bad debt rate used by the company was 1.0 percent of credit sales net of returns. Required: 1. Using the following categories, indicate the effect of each listed transaction, including the write-off of the uncollectible account the adjusting entry for estimated bad debts (ignore cost of goods sold). The first transaction is used as an example. (Round your answers to the nearest whole dollar amount. Any decrease in account balances should be indicated by a minus sign.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Transcribed Image Text:Balances January 1, current year
Accounts receivable (various customers)
Allowance for doubtful accounts
$ 119,000
6,000
In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 3/10,
n/30 (assume a unit sales price of $900 in all transactions).
Transactions during current year
a. Sold merchandise for cash, $236,000.
b. Sold merchandise to R. Smith; invoice price, $11,500.
c. Sold merchandise to K. Miller; invoice price, $27,000.
d. Two days after purchase date, R. Smith returned one of the units purchased in (b) and received account credit.
e. Sold merchandise to B. Sears; invoice price, $25,000.
f. R. Smith paid his account in full within the discount period.
g. Collected $98,000 cash from customer sales on credit in prior year, all within the discount periods.
h. K. Miller paid the invoice in () within the discount period.
1. Sold merchandise to R. Roy; Invoice price, $20,500.
J. Three days after paying the account in full, K. Miller returned seven defective units and received a cash refund.
k. After the discount period, collected $6,000 cash on an account receivable on sales in a prior year.
1. Wrote off a prior year account of $4,000 after deciding that the amount would never be collected.
m. The estimated bad debt rate used by the company was 1.0 percent of credit sales net of returns.
Required:
1. Using the following categories, indicate the effect of each listed transaction, including the write-off of the uncollectible account a
the adjusting entry for estimated bad debts (ignore cost of goods sold). The first transaction is usdd as an example. (Round your
answers to the nearest whole dollar amount. Any decrease in account balances should be indicated by a minus sign.)
Sales
Discounts
(taken)
Sales
Returns and
Allowances
Sales
Bad Debt
Transaction
Revenue
Expense
Transcribed Image Text:Sales
Sales
Returns and
Allowances
Sales
Transaction
Bad Debt
Expense
eBook
Discounts
Revenue
(taken)
a.
2$
236,000
Print
b.
11,500
C.
27,000
d.
900
References
25,000
е.
f.
318
9.
2,852
h.
810
i.
20,500
j.
k.
1.
m.
Total
$ 320,000 $
3,980 $
900
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