Question: At December 1 2014 Imalda Inc reported the following information

At December 1, 2014, Imalda Inc. reported the following information on its statement of financial position:
Trade receivables ................. $ 154,000
Allowance for doubtful accounts ........... 4,500 (credit balance)
The following transactions were completed during December 2014: December 5 Sold merchandise items for $ 67,000. An amount of $ 19,000 was received in cash and the rest on account; terms 2/ 10, n/ 60. The total cost of sales was $ 35,000. December 12 Collected cash for half of the credit sales made on December 5. December 20 Collected $ 90,000 in cash from customers for credit sales made in November 2014. December 26 One of Imalda’s customers that owed $ 3,000 to the company experienced financial problems and was forced to close its business in December. The full amount was considered uncollectible. Imalda uses the aging of trade receivables method to determine bad debt expense. The aging schedule at December 31, 2014, gives the following information about the trade receivables estimated uncollectible:
1. Prepare the journal entries to record the transactions that occurred in December 2014.
2. Using the aging schedule, compute the bad debt expense for December 2014 and prepare the related adjusting entry.
3. Compute the gross profit percentage and the receivables turnover ratio for December 2014 and explain their meaning.

View Solution:

Sale on SolutionInn
  • CreatedAugust 04, 2015
  • Files Included
Post your question