Lay's wrote off $6
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Ray Neil is a multinational dealer of uniforms for medical personnel. On January 1, 2017, Ray's had the
following account balances:
$27,000
Accounts Receivable
Less Allowance for Doubtful Accounts
(4,000)
$23,000
Net Accounts Receivable
Required:
i. During 2017, Ray's wrote off $6,000 in uncollectible accounts. Make this journal entry.
ii. One account in the amount of $500 that had been written off in (i) above was collected. Make the
journal entries to reinstate the account and show its collection.
iii. During 2017, Ray's made credit sales of $145,000 and collected $115,000 of accounts receivable.
Record these journal entries.
iv. At the end of the year, Ray's determines that approximately 7 percent of its ending accounts
receivable balance will not be collected. Ray's uses the percentage of receivables method of
calculating bad debts. Make the necessary journal entry.
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