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Income statement and balance sheet approaches.

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Allowance method: Income statement and balance sheet;approaches.Tempe;Company reported accounts receivable of $300,000 and an allow?ance for;uncollectible accounts of $31,000 (credit) on the December 31, 19X2, balance;sheet. The following data pertain to 19X3 activities and operations;Sales;on account;$2,000,000;Cash;collections from credit customers;1,600,000;Sales;discounts;50,000;Sales;returns & allowances;100,000;Uncollectible;accounts written off;29,000;Collections;on accounts that were previously written off;2,700;Instructions;Prepare journal entries to;record the sales- and receivables-related trans?actions from 19X3.;Prepare the December 31;19X3, adjusting entry for uncollectible ac?counts assuming that uncollectibles;are estimated to be 2% of net credit sales.;Prepare the December 31;19X3, adjusting entry for uncollectible ac?counts assuming that uncollectibles;are estimated at 1% of year-end accounts receivable.;Compute the amount of the;adjusting entry in part (c) assuming that $46,000, rather than $29,000, of;accounts were written off in 19X3.

 

Paper#27516 | Written in 18-Jul-2015

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