The June 30, 20X 7, balance sheet of Texas Golf Carts reports the following: Accounts receivable…………………………………. $143,000 Allowance for Uncollectible Accounts (Cr)………… 3,200 At the end of each quarter, Texas Gulf Carts estimates uncollectible account expense to be 1½% of credit sales. At the end of the year, the company ages its accounts receivable and adjusts the balance in the Allowance for Uncollectible Accounts to correspond to the aging schedule. During July to December of 20X7, Texas Gulf Carts completed the following transactions: August 9 Made a compound entry to write off uncollectible accounts: J. Aguilar, $200; Seaton Co., $100; and T. Taylor, $700. Sept. 30 Recorded uncollectible account expense equal to 1½% of credit sales of $140,000 Oct. 18 Wrote off accounts receivable as uncollectible the $500 account receivable from Lantz Co. and the $400 account receivable from Navisor Corp. Dec. 31 Recorded uncollectible-account expense based on the aging of receivables, which follows: Age of Accounts (in Days) Total 1-30 31–60 61–90 Over90 $163,000 $100,000 $40,000 $14,000 9,000 Estimated percent uncollectible 0.1% 0.5% 5% 30% Required: Record the transactions in the journal. Open the Allowance for Uncollectible Account and post entries affecting that account. Keep a running balance. Show how Texas Gulf Carts should report accounts receivable on its balance sheet at December 31, 20X7
The June 30, 20X 7,
Allowance for Uncollectible Accounts (Cr)………… 3,200
At the end of each quarter, Texas Gulf Carts estimates uncollectible account expense to be 1½% of credit sales. At the end of the year, the company ages its accounts receivable and adjusts the balance in the Allowance for Uncollectible Accounts to correspond to the aging schedule. During July to December of 20X7, Texas Gulf Carts completed the following transactions:
August 9 Made a compound entry to write off uncollectible
accounts: J. Aguilar, $200; Seaton Co., $100; and T.
Taylor, $700.
Sept. 30 Recorded uncollectible account expense equal to 1½% of credit
sales of $140,000
Oct. 18 Wrote off accounts receivable as uncollectible the $500 account
receivable from Lantz Co. and the $400 account receivable from
Navisor Corp.
Dec. 31 Recorded uncollectible-account expense based on the aging of
receivables, which follows:
Age of Accounts (in Days)
Total 1-30 31–60 61–90 Over90
$163,000 $100,000 $40,000 $14,000 9,000
Estimated percent uncollectible 0.1% 0.5% 5% 30%
Required:
- Record the transactions in the journal.
- Open the Allowance for Uncollectible Account and
post entries affecting that account. Keep a running balance.
- Show how Texas Gulf Carts should report accounts receivable on its balance sheet at December 31, 20X7
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