Question-1: At December 31, 2013, Globe Trotter Imports reported the following information on its statement of financial position. Accounts receivable Tk.220,000 Less: Allowance for doubtful accounts 15,000 During 2014, the company had the following transactions related to receivables. 1. Sales on account Tk.2,400,000 2. Sales returns and allowances 45,000 3. Collections of accounts receivable 2,250,000 4. Write-offs of accounts receivable deemed uncollectible 13,000 5. Recovery of bad debts previously written off as uncollectible 2,000. Instructions (a) Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. (b) Enter the January 1, 2014, balances in Accounts Receivable and Allowance for Doubtful Accounts. Post the entries to the two accounts (use T-accounts), and determine the balances. (c) Prepare the journal entry to record bad debt expense for 2014, assuming that an aging of accounts receivable indicates that estimated bad debts are Tk.22,000. (d) Compute the accounts receivable turnover ratio for the year 2014, assuming the expected bad debt information presented in (c).

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Question-1: At December 31, 2013, Globe Trotter Imports reported the following information
on its statement of financial position.
Accounts receivable Tk.220,000
Less: Allowance for doubtful accounts 15,000
During 2014, the company had the following transactions related to receivables.
1. Sales on account Tk.2,400,000
2. Sales returns and allowances 45,000
3. Collections of accounts receivable 2,250,000
4. Write-offs of accounts receivable deemed uncollectible 13,000
5. Recovery of bad debts previously written off as uncollectible 2,000.
Instructions
(a) Prepare the journal entries to record each of these five transactions. Assume that no
cash discounts were taken on the collections of accounts receivable.
(b) Enter the January 1, 2014, balances in Accounts Receivable and Allowance for Doubtful
Accounts. Post the entries to the two accounts (use T-accounts), and determine the
balances.
(c) Prepare the journal entry to record bad debt expense for 2014, assuming that an aging
of accounts receivable indicates that estimated bad debts are Tk.22,000.
(d) Compute the accounts receivable turnover ratio for the year 2014, assuming the expected
bad debt information presented in (c).

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