Week 7 Discussion question Accounting for Assets: Receivables Johnson company’s financial year ended on December 31, 2010. All the transactions related to the company’s uncollectible accounts are can be found below: January 15 Wrote of $440 account of Miller Company as uncollectible April 2nd Re-establish the account of Louisa Teller and record the collection of $1,050 as payment in full for her account which had been written off earlier July 31 Received 40% of the $700 balance owed by William John and wrote off the remainder as uncollectible August 15 Wrote off as uncollectible the accounts of Sherwin Company, $1,700 and V. Vasell $2,200 September 26 Received 25% of the $1,140 owed by Grant Company and wrote off the remainder as uncollectible October 16 Received $741 from M. Fuller in full payment of his account which had been written off earlier as uncollectible December 31 Estimated uncollectible accounts expense for the year to be 1.5% of net credit sales of $521,000 The accounts receivable account had a balance of $114,630 and the beginning balance in the allowance for uncollectible accounts was $6,200. Required: Prepare journal entries for each transaction. Prepare the Allowance for Uncollectible and the Accounts Receivable accounts based on the information presented and balance off each account. Prepare the balance sheet extract as at Dec 31 to show the net realizable value for the Accounts Receivable. Assume that the aging of accounts receivable method was used by the company and that $7,050 of the accounts receivable as of December 31 were estimated to be uncollectible. You are now required to: Determine the amount to be charged to uncollectible expense (show your
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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.
Week 7 Discussion question
Accounting for Assets: Receivables
Johnson company’s financial year ended on December 31, 2010. All the transactions related to the company’s uncollectible accounts are can be found below:
|
January 15 |
Wrote of $440 account of Miller Company as uncollectible |
|
April 2nd |
Re-establish the account of Louisa Teller and record the collection of $1,050 as payment in full for her account which had been written off earlier |
|
July 31 |
Received 40% of the $700 balance owed by William John and wrote off the remainder as uncollectible |
|
August 15 |
Wrote off as uncollectible the accounts of Sherwin Company, $1,700 and V. Vasell $2,200 |
|
September 26 |
Received 25% of the $1,140 owed by Grant Company and wrote off the remainder as uncollectible |
|
October 16 |
Received $741 from M. Fuller in full payment of his account which had been written off earlier as uncollectible |
|
December 31 |
Estimated uncollectible accounts expense for the year to be 1.5% of net credit sales of $521,000 |
The
Required:
Prepare
Prepare the Allowance for Uncollectible and the Accounts Receivable accounts based on the information presented and balance off each account.
Prepare the
Assume that the aging of accounts receivable method was used by the company and that $7,050 of the accounts receivable as of December 31 were estimated to be uncollectible. You are now required to:
Determine the amount to be charged to uncollectible expense (show your
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