Do not give image format Carla Vista Inc. began operations in January 2023. All of the company's sales are made on account. At the end of its first year ofoperations, the company's trial balance at December 31, 2023, showed a $65,500 outstanding balance in Accounts Receivable. During2023,75% of the total credit sales were collected, and no accounts were written off as uncollectible. After grouping its receivablesbased on credit risk characteristics and estimating the expected rate of credit losses for each group, management estimated that totalexpected credit losses would be $3,930. During the following year, 2024, Carla Vista had sales totalling $250,000. It collected 80% ofthese sales, together with 95% of the outstanding receivables from 2023. During 2024, the accounts of seven customers, who owed atotal of $4,100, were judged uncollectible and were written off. During the year, the company recovered $2,600 from customerswhose accounts had previously been written off. (Note that this amount was not included in the collection figures given above.) Aftergrouping its receivables based on credit risk characteristics and estimating the expected rate of credit losses for each group, thecompany estimated its total expected credit losses will be $4,930.(a)Your answer is partially correct.Prepare the necessary journal entries for recording all of the preceding transactions in the accounting system of Carla Vista Inc.for 2023 and 2024. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry isrequired, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)Account Titles and Explanation2023Accounts ReceivableSales Revenue(To record credit sales)CashAccounts Receivable(To record cash collected from customers)Accounts ReceivableAllowance for Expected Credit LossesDebit262,000196,5003,930Credit262,000196,5003,930 (To recognize the credit losses)2024Accounts ReceivableSales Revenue(To record credit sales)CashAccounts Receivable(To record cash collected from customers)Allowance for Expected Credit Losses(b)Accounts Receivable(To write off accounts judged uncollectible)Accounts ReceivableAllowance for Expected Credit Losses(To reinstate an account that was previouslywritten off)CashAccounts Receivable(To record subsequent collection of accountsthat were previously written off)Accounts ReceivableAllowance for Expected Credit Losses(To recognize the credit losses)Show Transcribed TextAccounts Receivable, NetCarla Vista Inc.Statements of Financial Position (Partial)As at December 31, 2024250,000$262,2254,1002,600Show the accounts receivable section of the statement of financial position at December 31, 2024.2,6002,500250,000262,2254,1002,6002,6002,500

Accounts receivable is the amount owed by the customers to the company to whom the sales were made…

Carla Vista Inc. began operations in January 2023. All of the company's sales are made on account. At the end of its first year of operations, the company's trial balance at December 31, 2023, showed a $65,500 outstanding balance in Accounts Receivable. During 2023, 75% of the total credit sales were collected, and no accounts were written off as uncollectible. After grouping its receivables based on credit risk characteristics and estimating the expected rate of credit losses for each group, management estimated that total expected credit losses would be $3,930. During the following year, 2024, Carla Vista had sales totalling $250,000. It collected 80% of these sales, together with 95% of the outstanding receivables from 2023. During 2024, the accounts of seven customers, who owed a total of $4,100, were judged uncollectible and were written off. During the year, the company recovered $2,600 from customers whose accounts had previously been written off. (Note that this amount was not included in the collection figures given above.) After grouping its receivables based on credit risk characteristics and estimating the expected rate of credit losses for each group, the company estimated its total expected credit losses will be $4,930.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q