A local phone company had a customer who rang up $ 300 in charges during September 2015 but did not pay. Despite reminding the customer of this balance, the company was unable to collect in October, November, or December. In March 2016, the company finally gave up and wrote off the account balance. What amount of Sales, Bad Debt Expense, and Net Income would the phone company report from these events in 2015 and 2016 if it used the allowance method of accounting for uncollectible accounts? Assume the company estimates 5 percent of credit sales will go bad.
Answer to relevant QuestionsWhat are the three components of the interest formula? Explain how this formula adjusts for interest periods that are less than a full year. Nova Corporation hired a new product manager and agreed to provide her a $ 20,000 relocation loan on a six-month, 7 percent note. Prepare journal entries to record the following transactions for Nova Corporation. Rather than ...On December 31, 2014, Extreme Fitness has adjusted balances of $ 800,000 in Accounts Receivable and $ 55,000 in Allowance for Doubtful Accounts. On January 2, 2015, the company learns that certain customer accounts are not ...The following transactions took place for Parker’s Grocery. a. Jan. 1 Loaned $ 50,000 to a cashier of the company and received back a one-year, 8 percent note. b. June 30 Accrued interest on the note. c. Dec. 31 Received ...Prior to recording the following, Elite Electronics, Inc., had a credit balance of $ 2,000 in its Allowance for Doubtful Accounts. Required: Prepare journal entries for each transaction. a. On August 31, a customer balance ...
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