Question :
56) At December 31, 2011 a company’s Accounts receivable balance : 1253209
56) At December 31, 2011 a company’s Accounts receivable balance was $12,600 and its Allowance for uncollectible accounts was $(1,000).
Part A: Show the effect of the following events on the accounting equation, including both account titles and amounts.
Shareholders’ equity
Assets
Liabilities
CC
Retained earnings
1.
Credit sales in 2012 were $117,000.
Cost of goods sold was $45,000.
2.
During 2012, $900 of specific receivables were written off as uncollectible.
3.
During 2012, $119,000 of receivables were collected.
4.
At Dec. 31, 2012, the company estimates that 5% of its accounts receivable will be uncollectible.
Part B: Select the column which represents the 2012 financial statement where the item will appear, and fill in the correct dollar amount.
Income Statement
Balance Sheet
1. Net accounts receivable
2. Sales
3. Accounts receivable
4. Bad debts expense
5. Allowance for uncollectible accounts
57) On July 31, the accountant for Team Shirts was reviewing items related to accounts receivable. The following information was gathered for July. Credit sales for July were $13,700. Bad debts are estimated to be 3% of sales. The unadjusted balance in the Allowance for uncollectible accounts is $(750).
1. What is the amount of bad debts expense for July and on which financial statement is it found?
2. What will be the amount in the Allowance for uncollectible accounts at July 31 and on which financial statement is it found?
58) Gnu Company began business January 1, 2011. The company has a liberal credit policy and has been experiencing a high rate of uncollectible accounts. Due to the significance of this amount, the company uses the allowance method for accounting for bad debts. During 2011, credit sales were $400,000. The year-end accounts receivable balance was $170,000.
Part A: Assume that the company uses the sales method and estimates that 5% of credit sales will become bad debts. Select the column which represents the financial statement where the item will appear, and fill in the correct dollar amount:
Income Statement
Balance Sheet
1. Bad debts expense
2. Net accounts receivable
3. Sales
4. Accounts receivable
5. Allowance for uncollectible accounts
Part B: Now assume that the company uses the accounts receivable method and estimates that 10% of accounts receivable will be uncollectible. Select the column which represents the financial statement where the item will appear, and fill in the correct dollar amount:
Income Statement
Balance Sheet
1. Bad debts expense
2. Net accounts receivable
3. Sales
4. Accounts receivable
5. Allowance for uncollectible accounts
59) Discuss the importance of reporting net accounts receivable.
