Okay Optical, Inc. (OOI), began operations in January, selling inexpensive sunglasses to large retailers like Walgreens and other smaller stores. Assume the following transactions occurred during its first six months of operations. 1 sold merchandise to Walgreens for $20,000; the cost of these goods to 00I was $12,000. January February 12 Received payment in full from Walgreens. 1 sold merchandise to Bravis Pharmaco on account for $3,000; the cost of these goods to 00I was $1,400. 1 Sold merchandise to Tony's Pharmacy on account for $8,000. The cost to 00I was $4,400. 1 Sold merchandise to Anjuli Stores on account for $2,000; the cost to 0OI was $1,200. March April Мay June 17 Received $6,500 on account from Tony's Pharmacy. Required: 1. Complete the following aged listing of customer accounts at June 30. 2. Estimate the Allowance for Doubtful Accounts required at June 30 assuming the following uncollectible rates: one month, 1 percent; two months, 5 percent; three months, 20 percent; more than three months, 40 percent. 3-a. Show how OOI would report its accounts receivable on its June 30 balance sheet. 3-b. What amounts would be reported on an income statement prepared for the six-month period ended June 30?

Okay Optical, Inc. (OOI), began operations in January, selling inexpensive sunglasses to large retailers like Walgreens and other smaller stores. Assume the following transactions occurred during its first six months of operations. 1 sold merchandise to Walgreens for $20,000; the cost of these goods to 00I was $12,000. January February 12 Received payment in full from Walgreens. 1 sold merchandise to Bravis Pharmaco on account for $3,000; the cost of these goods to 00I was $1,400. 1 Sold merchandise to Tony's Pharmacy on account for $8,000. The cost to 00I was $4,400. 1 Sold merchandise to Anjuli Stores on account for $2,000; the cost to 0OI was $1,200. March April Мay June 17 Received $6,500 on account from Tony's Pharmacy. Required: 1. Complete the following aged listing of customer accounts at June 30. 2. Estimate the Allowance for Doubtful Accounts required at June 30 assuming the following uncollectible rates: one month, 1 percent; two months, 5 percent; three months, 20 percent; more than three months, 40 percent. 3-a. Show how OOI would report its accounts receivable on its June 30 balance sheet. 3-b. What amounts would be reported on an income statement prepared for the six-month period ended June 30?

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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