Refer to the information in Exercise 7. In Exercise 7 Required a. Assume that Demron estimates uncollectible

Question:

Refer to the information in Exercise 7.
In Exercise 7

Required
a. Assume that Demron estimates uncollectible accounts as 2% of receivables. Prepare the adjusting entry required on December 31, 2014, to estimate uncollectible receivables.
b. During 2015, credit sales were $620,000 (cost of sales $406,500); sales discounts taken were $12,000; accounts receivable collected were $440,000; and accounts written off during the year totaled $10,000. Prepare the entries to record these transactions.
c. Record the adjusting entry required on December 31, 2015, to estimate uncollectible receivables assuming it is based on 2% of receivables.
d. Show how accounts receivable would appear on the December 31, 2015, balance sheet.
Analysis Component:
Comment on the advantages and disadvantages of using the balance sheet approach for estimating uncollectible.

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...