Joey's Bike Shop sells new and used blcycle parts. Although a majority of Its sales are cash sales, It makes a slgnificant amount of credit sales. During Year 1, Its first year of operatilons, Joey's Bike Shop experlenced the following: Sales on account $260, 000 Cash sales 580,000 Collections of accounts receivable 235,000 Uncollectible accounts charged off during the year 1,250 Requlred Assume that Joey's Bike Shop uses the allowance method of accounting for uncollectible accounts and estimates that 1 percent of Its sales on account will not be collected. Answer the following questlons: a. What Is the Accounts Recelvable balance at December 31, Year 1? b. What Is the ending balance of Allowance for Doubtful Accounts at December 31, Year 1, after all entrles and adjusting entrles are posted? c. What Is the amount of uncollectible accounts expense for Year 1? d. What Is the net realizable value of accounts recelvable at December 31, Year 1? Accounts receivable b. Allowance for doubtful accounts Uncollectible accounts expense C. Net realizable value
Joey's Bike Shop sells new and used blcycle parts. Although a majority of Its sales are cash sales, It makes a slgnificant amount of credit sales. During Year 1, Its first year of operatilons, Joey's Bike Shop experlenced the following: Sales on account $260, 000 Cash sales 580,000 Collections of accounts receivable 235,000 Uncollectible accounts charged off during the year 1,250 Requlred Assume that Joey's Bike Shop uses the allowance method of accounting for uncollectible accounts and estimates that 1 percent of Its sales on account will not be collected. Answer the following questlons: a. What Is the Accounts Recelvable balance at December 31, Year 1? b. What Is the ending balance of Allowance for Doubtful Accounts at December 31, Year 1, after all entrles and adjusting entrles are posted? c. What Is the amount of uncollectible accounts expense for Year 1? d. What Is the net realizable value of accounts recelvable at December 31, Year 1? Accounts receivable b. Allowance for doubtful accounts Uncollectible accounts expense C. Net realizable value
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Joey's Bike Shop sells new and used blcycle parts. Although a majority of Its sales are cash sales, It makes a slgnificant amount of
credit sales. During Year 1, Its first year of operatlons, Joey's Bike Shop experlenced the followIng:
Sales on account
$260, 000
Cash sales
580,000
235,000
1,250
Collections of accounts receivable
Uncollectible accounts charged off during the year
Requlred
Assume that Joey's Bike Shop uses the allowance method of accounting for uncollectible accounts and estimates that 1 percent of Its
sales on account will not be collected. Answer the following questions:
a. What Is the Accounts Recelvable balance at December 31, Year 1?
b. What Is the ending balance of Allowance for Doubtful Accounts at December 31, Year 1, after all entrles and adjusting entrles are
posted?
c. What Is the amount of uncollectible accounts expense for Year 1?
d. What Is the net realizable value of accounts recelvable at December 31, Year 1?
Accounts receivable
Allowance for doubtful accounts
Uncollectible accounts expense
C.
d Net realizable value
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