Open general ledger accounts for Allowance for Uncollectible Accounts and Uncollectible-Accounts Expense. Keep running balances. All accounts begin with zero balance. Record the transactions in the general journal and post to the two ledger accounts. The December 31, 2008 balance of Accounts Receivable is $1 39,000. Show how Accounts Receivable would be reported on the balance sheet at that date.
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
Dialex Watches completed the following selected transactions during 2007 & 2008:
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2007 |
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Dec. 31 |
Estimated that uncollectible-account (bad-debt) expense for the year was 1% of credit sales of $400,000 and recorded the amount as expense. Use the allowance method. |
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Dec. 31 |
Made the closing entry for uncollectible-account expense. |
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2008 |
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Jan. 17 |
Sold inventory to Mitch Vanez, $600, on account. Ignore cost of goods sold. |
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June. 29 |
Wrote off Mitch Vanez’s account as uncollectible after repeated effort to collect from him. |
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Aug. 6 |
Received $600 from Mitch Vanez, along with a letter apologizing for being so late. Reinstated Vanez ’s account in full and recorded the cash receipt. |
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Dec. 31 |
Made a compound entry to write off the following accounts as uncollectible: Bernard Klaus, $1,700; Marie Moner, $1,300. |
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Dec. 31 |
Estimated that uncollectible expense for the year was 1% of credit sales of $480,000, and recorded that amount as expense |
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Dec. 31 |
Made the closing entry for uncollectible-account expense. |
Requirements:
- Open general ledger accounts for Allowance for Uncollectible Accounts and Uncollectible-Accounts Expense. Keep running balances. All accounts begin with zero balance.
- Record the transactions in the general journal and post to the two ledger accounts.
- The December 31, 2008 balance of
Accounts Receivable is $1 39,000. Show how Accounts Receivable would be reported on the balance sheet at that date.
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