Santa Maria Widget reviewed the following information from its accounting records for the year ended December 31, 2011, before adjustment:Sales during 2011$800,000Credit Sales are 80% of salesCollections from customers in 2011590,000Accounts Receivable 165,000Allowance for Uncollectible Accounts (before adjustment)2,050 credit Santa Maria Widget uses the percent-of-sales method, at 1.5%, to estimate uncollectible accounts for 2011. The president of the company wants to change to the aged accounts receivable method and estimates $7,500 as the uncollectible amount for 2011. For each method of determining the estimate amount, you are to provide: 1. the adjusting Journal entry. 2. the ending balance in the Allowance account. 3. the net realizable value of accounts receivable. my answer was: 1) Bad Debt Expense $9,600 Allowance for uncollectible accounts $9,600 2) Ending balance in allowance account $11,650 3)Net realizable value of accounts recievable $153, 350 But my teacher said: Your numbers are correct for the Percent of Credit Sales Method, but you omitted the journal entry. Also, you did not submit anything for the Aged AR method. help please?
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.
Santa Maria Widget reviewed the following information from its accounting records for the year ended December 31, 2011, before adjustment:Sales during 2011$800,000Credit Sales are 80% of salesCollections from customers in 2011590,000Accounts Receivable 165,000Allowance for Uncollectible Accounts (before adjustment)2,050 credit Santa Maria Widget uses the percent-of-sales method, at 1.5%, to estimate uncollectible accounts for 2011. The president of the company wants to change to the aged
For each method of determining the estimate amount, you are to provide:
1. the
2. the ending balance in the Allowance account.
3. the net realizable value of accounts receivable.
my answer was:
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