Avillion Corporation had a $45,000 debit balance in Accounts receivable and a $3,500 credit balance in Allowance
Question:
1. On January 1, 2015, the company learned that one of its customers (Smith Corporation), which owed $2,000, had filed for bankruptcy and could be unable to pay the amount due.
2. On March 1, 2015, Smith Corporations bankruptcy was finalized and the bankruptcy court notified all of its creditors (including Avillion Corporation) that Smith Corporation will pay 60 cents on the dollar for the amount owed to its creditors.
3. On May 7, 2015, Avillion Corporation received a check from Smith Corporation for the amount indicated by the court.
Required:
1. Provide journal entries to record the preceding transactions in Avillions books. In addition, using the following table format, show the effects of each transaction on the following financial statement items. Clearly indicate the amount and the direction of the effects
2. Assume that Avillion had instead prepared the following aging schedule on December 31,2014:
Accounts ReceivableAccounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Aging Schedule
Aging schedule is an accounting table that shows a company’s account receivables. It is an summarized presentation of accounts receivable into a separate time brackets that the rank received based upon the days due or the days past due. Generally... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Step by Step Answer:
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon