Question: In this problem we continue our accounting for Pure Water

In this problem, we continue our accounting for Pure Water, Inc., from Chapter 5. Refer to the Continuing Problem in Chapters 4 and 5. Assume that all 13 of the spas Pure Water, Inc., sold in September were sold on account for $5,000 each. Assume no collections on account were made in September. At September 30, Pure Water, Inc., estimates that 3% of the outstanding Accounts Receivable balance will not be collected. Pure Water uses the allowance method.
On August 31, the balance in Accounts Receivable is $3,700 and the balance in Allowance for Doubtful Accounts is $0.

1. Calculate the ending balance in Accounts Receivable at September 30.
2. Journalize the entry to record Pure Water, Inc.’s bad debt expense for September.
3. How will Accounts Receivable be reflected on Pure Water, Inc.’s balance sheet at September 30?

  • CreatedApril 29, 2014
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