Question: Grimm s Hardware Company uses the percent of sales method of

Grimm’s Hardware Company uses the percent of sales method of estimating uncollectible accounts expense for its monthly financial reporting and the aging of receivables method for its year-end reporting. The company had a $9,500 credit balance in Allowance For Doubtful Accounts on November 1, 2015. The following selected transactions were completed during the final two months of the current fiscal year by Grimm’s Hardware Company:
Nov. 15. Recorded a sale on account of $9,664 to Hart House Inc.; cost of goods sold was $5,800.
23. Wrote off account of Traders Ltd., $675.
27. Received $9,500 as partial payment on the $20,000 account of Olds Distributors Ltd.
30. Based on past history, 2% of sales are expected to be uncollectible.
Grimm’s Hardware Company recorded sales of $125,800 during November.
Dec. 1. Recorded a sale on account of $22,900 to Chang Construction Ltd; cost of goods sold was $15,550.
5. Received $675 from Traders Ltd., which had been written off on Nov. 23.
Reinstated the account and recorded the cash receipt.
31. Wrote off the following accounts as uncollectible (record as a compound journal entry):
Bill’s Construction Co. ........... $ 425
Trenton Construction Ltd. ......... 10,600
G. Schroeder .............. 864
31. Prepared the adjusting entry, using the following accounts receivable aging schedule:
Journalize the transactions, assuming Grimm’s Hardware Company uses a perpetual inventory system.

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  • CreatedSeptember 15, 2015
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