During its first year of operations, Environmental Products Inc. had sales of $875,000, all on account. Industry

Question:

During its first year of operations, Environmental Products Inc. had sales of $875,000, all on account. Industry experience suggests that Environmental Products' uncollectible will amount to 2% of credit sales. At December 31, 2013, Environmental Products' accounts receivable total $80,000. The company uses the allowance method to account for uncollectibles.
1. Make Environmental Products' journal entry for bad debt expense using the percentage-of sales method.
2. Show how Environmental Products could report accounts receivable on its balance sheet at December 31, 2013, by disclosing the allowance for uncollectible accounts .
Accounts Receivable
Accounts 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...
Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Financial Accounting

ISBN: 978-0133472264

5th Canadian edition

Authors: Charles Horngren, William Thomas, Walter Harrison, Greg Berberich, Catherine Seguin

Question Posted: