e following information is extracted from Shelton Corporation's accounting records at the beginning of 2016: Accounts Receivable $67,000 Allowance for Doubttul Accounts 1,300 (credit) aring 2016, sales on credit amounted to S582,000, S552,800 was collected on outstanding receivables and $2,600 of receivables were writen off as uncollectible. On December 31, 2016, Shelton estimates its bad debts to be 4% of the outstanding gross accounts receivable balance. Required: 1. Prepare the journal entry necessary to record Shelton's estimate of bad debt expense for 2016. 2. Prepare the Accounts Receivable section of Sheliton's December 31, 2016, balance sheet 3. Compute Sheliton's receivables turnover. (Round to one decimal place) 4. Ir Sheldon uses IFRS, what might be the heading for the accounts receivable section in Requirement 27

e following information is extracted from Shelton Corporation's accounting records at the beginning of 2016: Accounts Receivable $67,000 Allowance for Doubttul Accounts 1,300 (credit) aring 2016, sales on credit amounted to S582,000, S552,800 was collected on outstanding receivables and $2,600 of receivables were writen off as uncollectible. On December 31, 2016, Shelton estimates its bad debts to be 4% of the outstanding gross accounts receivable balance. Required: 1. Prepare the journal entry necessary to record Shelton's estimate of bad debt expense for 2016. 2. Prepare the Accounts Receivable section of Sheliton's December 31, 2016, balance sheet 3. Compute Sheliton's receivables turnover. (Round to one decimal place) 4. Ir Sheldon uses IFRS, what might be the heading for the accounts receivable section in Requirement 27

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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

CHART OF ACCOUNTS
Shelton Corporation
General Ledger
ASSETS
REVENUE
111 Cash
411 Sales Revenue
121 Accounts Receivable
122 Allowance for Doubtful Accounts
EXPENSES
141 Inventory
500 Cost of Goods Sold
152 Prepaid Insurance
511 Insurance Expense
181 Equipment
512 Utilities Expense
198 Accumulated Depreciation
521 Salaries Expense
532 Bad Debt Expense
LIABILITIES
540 Interest Expense
211 Accounts Payable
541 Depreciation Expense
231 Salaries Payable
559 Miscellaneous Expenses
250 Unearned Revenue
910 Income Tax Expense
261 Income Taxes Payable
EQUITY
311 Common Stock
331 Retained Earnings

The following information is extracted from Shelton Corporation's accounting records at the beginning of 2016:
Accounts Receivable
$67,000
Allowance for Doubtful Accounts
1,300
(credit)
During 2016, sales on credit amounted to $582,000, $552,800 was collected on outstanding receivables and $2,600 of receivables were written off as uncollectible. On December 31, 2016, Shelton estimates its bad debts to be 4% of the outstanding gross accounts receivable balance.
Required:
1. Prepare the journal entry necessary to record Shelton's estimate of bad debt expense for 2016.
2. Prepare the Accounts Receivable section of Shelton's December 31, 2016, balance sheet.
3. Compute Shelton's receivables turnover. (Round to one decimal place.)
4. If Sheldon uses IFRS, what might be the heading for the accounts receivable section
Requirement 2?

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