Brian Sipe began operations of his business, Sipe Sons Incorporated, on January 1, Year One. During the year, the company performed services on credit of $192,000. Of that amount, $115,750 was collected in cash during the year. Brian estimates, of the remaining amount due, $5,100 may not be collected. Prepare the entries for the events during Year One. What is the balance in the accounts receivable account? What is the amount of receivables reported on the balance sheet? Why would Brian have a separate allowance account and not reduce the receivable balance for the amount estimated to be uncollectible? What type of account is Allowance for Doubtful Accounts? Continuing problem 2, Sipe Sons Incorporated continued to have successful operations in Year Two. Sales on credit amounted to $205,000 and cash collections were $183,250. At the end of Year Two, he estimates of the remaining amount due, $8,600 may not be collected. What is the balance in the accounts receivable account at the end of Year Two? What is the net realizable value of the receivables at the end of Year Two? Prepare the income statement for Sipe Sons Incorporated for both Year One and Year Two. Why is the bad debt expense on the income statement in Year Two different from the balance in the allowance for doubtful account?
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Brian Sipe began operations of his business, Sipe Sons Incorporated, on January 1, Year One. During the year, the company performed services on credit of $192,000. Of that amount, $115,750 was collected in cash during the year. Brian estimates, of the remaining amount due, $5,100 may not be collected.
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Prepare the entries for the events during Year One.
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What is the balance in the
accounts receivable account? -
What is the amount of receivables reported on the
balance sheet ? -
Why would Brian have a separate allowance account and not reduce the receivable balance for the amount estimated to be uncollectible?
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What type of account is Allowance for Doubtful Accounts?
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Continuing problem 2, Sipe Sons Incorporated continued to have successful operations in Year Two. Sales on credit amounted to $205,000 and cash collections were $183,250. At the end of Year Two, he estimates of the remaining amount due, $8,600 may not be collected.
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What is the balance in the accounts receivable account at the end of Year Two?
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What is the net realizable value of the receivables at the end of Year Two?
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Prepare the income statement for Sipe Sons Incorporated for both Year One and Year Two.
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Why is the
bad debt expense on the income statement in Year Two different from the balance in the allowance for doubtful account?
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