The following list of accounts was drawn for Tile, Etc., Inc. on December 31, Year 1, after the closing entries were posted Account Title Cash Accounts receivable Allowance for doubtful accounts Inventory Accounts payable Common stock Retained earnings $150,000 133,000 22,000 441,000 103,000 490,000 109,000 Tile, Etc. had the following transactions in Year 2 1. Purchased merchandise on account for $620,000. 2. Sold merchandise that cost $460,000 for $970,000 on account. 3. Sold for $285,000 cash merchandise that had cost $176,000 4. Sold merchandise for $230,000 to credit card customers. The merchandise had cost $112.000. The credit card company charges 4 percent fee. 5. Collected $700,000 cash from accounts receivable. 6. Paid $650,000 cash on accounts payable. 7. Paid $153,000 cash for selling and administrative expenses. 8. Collected cash for the full amount due from the credit card company (see item 4) 9. Loaned $50,000 to J. Parks. The note had an 9 percent interest rate and a one-year term to maturity 10 Wrote off $8,300 of accounts as uncollectible. 11. Made the following adjusting entries: (a) Recorded uncollectible accounts expense estimated at 1 percent of sales on account. (b) Recorded seven months of accrued interest on the note at December 31, Year 2 (see item 9)
The following list of accounts was drawn for Tile, Etc., Inc. on December 31, Year 1, after the closing entries were posted Account Title Cash Accounts receivable Allowance for doubtful accounts Inventory Accounts payable Common stock Retained earnings $150,000 133,000 22,000 441,000 103,000 490,000 109,000 Tile, Etc. had the following transactions in Year 2 1. Purchased merchandise on account for $620,000. 2. Sold merchandise that cost $460,000 for $970,000 on account. 3. Sold for $285,000 cash merchandise that had cost $176,000 4. Sold merchandise for $230,000 to credit card customers. The merchandise had cost $112.000. The credit card company charges 4 percent fee. 5. Collected $700,000 cash from accounts receivable. 6. Paid $650,000 cash on accounts payable. 7. Paid $153,000 cash for selling and administrative expenses. 8. Collected cash for the full amount due from the credit card company (see item 4) 9. Loaned $50,000 to J. Parks. The note had an 9 percent interest rate and a one-year term to maturity 10 Wrote off $8,300 of accounts as uncollectible. 11. Made the following adjusting entries: (a) Recorded uncollectible accounts expense estimated at 1 percent of sales on account. (b) Recorded seven months of accrued interest on the note at December 31, Year 2 (see item 9)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Assets
Total assets
Liabilities
Total liabilities
Stockholders' equity
TILE, ETC., INC.
Balance Sheet
As of December 31, Year 2
Total stockholders' equity
Total liabilities and stockholders' equity
P
MA
$
0
0
0
Transcribed Image Text:The following list of accounts was drawn for Tile, Etc., Inc. on December 31, Year 1, after the closing entries were posted
Account Title
Cash
Accounts receivable
Allowance for doubtful accounts
Inventory
Accounts payable
Common stock
Retained earnings
$150,000
133,000
22,000
441,000
103,000
490,000
109,000
Tile, Etc. had the following transactions in Year 2:
1. Purchased merchandise on account for $620,000.
2. Sold merchandise that cost $460,000 for $970,000 on account.
3. Sold for $285,000 cash merchandise that had cost $176,000.
4. Sold merchandise for $230,000 to credit card customers. The merchandise had cost $112.000. The credit card company charges a
4 percent fee.
5. Collected $700,000 cash from accounts receivable.
6. Paid $650,000 cash on accounts payable
7. Paid $153,000 cash for selling and administrative expenses.
8. Collected cash for the full amount due from the credit card company (see item 4)
9. Loaned $50,000 to J. Parks. The note had an 9 percent interest rate and a one-year term to maturity
10 Wrote off $8,300 of accounts as uncollectible.
11. Made the following adjusting entries:
(a) Recorded uncollectible accounts expense estimated at 1 percent of sales on account.
(b) Recorded seven months of accrued interest on the note at December 31, Year 2 (see item 9)
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