Exercise 7-8A (Algo) Accounting for uncollectible accounts: percent of receivables allowance method LO 7-2, 7-3 Vulcan Service Company experienced the following transactions for Year 1, its first year of operations: 1. Provided $70,000 of services on account. 2. Collected $42,000 cash from accounts receivable. 3. Paid $28,000 of salaries expense for the year. 4. Adjusted the accounts using the following information from an accounts receivable aging schedule: Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance Current $20,720 0.01 0 to 30 1,400 0.05 31 to 60 1,960 61 to 90 1,680 Over 90 days 2,240 0.10 0.30 0.50 Required 1. Record the given transactions in general journal form and post to T-accounts. 2. Prepare the income statement for Vulcan Service Company for Year 1. 3. What is the net realizable value of the accounts receivable at December 31, Year 1?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Exercise 7-8A (Algo) Accounting for uncollectible accounts: percent of
receivables allowance method LO 7-2, 7-3
Vulcan Service Company experienced the following transactions for Year 1, its first year of operations:
1. Provided $70,000 of services on account.
2. Collected $42,000 cash from accounts receivable.
3. Paid $28,000 of salaries expense for the year.
4. Adjusted the accounts using the following information from an accounts receivable aging schedule:
Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance
Current
$20,720 0.01
0 to 30
1,400
31 to 60
1,960 0.10
61 to 90
1,680
0.30
Over 90 days
2,240
0.05
0.50
Required
1. Record the given transactions in general journal form and post to T-accounts.
2. Prepare the income statement for Vulcan Service Company for Year 1.
3. What is the net realizable value of the accounts receivable at December 31, Year 1?
Transcribed Image Text:Exercise 7-8A (Algo) Accounting for uncollectible accounts: percent of receivables allowance method LO 7-2, 7-3 Vulcan Service Company experienced the following transactions for Year 1, its first year of operations: 1. Provided $70,000 of services on account. 2. Collected $42,000 cash from accounts receivable. 3. Paid $28,000 of salaries expense for the year. 4. Adjusted the accounts using the following information from an accounts receivable aging schedule: Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance Current $20,720 0.01 0 to 30 1,400 31 to 60 1,960 0.10 61 to 90 1,680 0.30 Over 90 days 2,240 0.05 0.50 Required 1. Record the given transactions in general journal form and post to T-accounts. 2. Prepare the income statement for Vulcan Service Company for Year 1. 3. What is the net realizable value of the accounts receivable at December 31, Year 1?
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