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Allowance method

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Question;Allowance method: Income statement and balance sheetapproaches.TempeCompany reported accounts receivable of $300,000 and an allow?ance foruncollectible accounts of $31,000 (credit) on the December 31, 19X2, balancesheet. The following data pertain to 19X3 activities and operations: Sales on account$2,000,000Cash collections from credit customers1,600,000Sales discounts50,000Sales returns & allowances100,000Uncollectible accounts written off29,000Collections on accounts that were previously written off2,700InstructionsPrepare journal entries torecord the sales- and receivables-related trans?actions from 19X3.Prepare the December 31,19X3, adjusting entry for uncollectible ac?counts assuming that uncollectiblesare estimated to be 2% of net credit sales.Prepare the December 31,19X3, adjusting entry for uncollectible ac?counts assuming that uncollectiblesare estimated at 1% of year-end accounts receivable.Compute the amount of theadjusting entry in part (c) assuming that $46,000, rather than $29,000, ofaccounts were written off in 19X3.

 

Paper#51387 | Written in 18-Jul-2015

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