Brubacher Service Company sells for cash and on account. By selling on credit, Brubacher cannot expect to

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Brubacher Service Company sells for cash and on account. By selling on credit, Brubacher cannot expect to collect \(100 \%\) of its accounts receivable. At December 31, 2020, and 2019, respectively, Brubacher reported the following on its balance sheet (in thousands of dollars):image text in transcribed


During the year ended December 31, 2020, Brubacher earned service revenue and collected cash from customers. Bad debt expense for the year was \(\$ 335\) thousand and Brubacher wrote off uncollectible accounts receivable.
{Requirements}
1. Prepare T-accounts for Accounts Receivable and Allowance for Uncollectibles, and insert the December 31, 2019, balances as given.
2. Journalize the following transactions of Brubacher for the year ended December 31, 2020. Explanations are not required

a. Service revenue on account, \(\$ 6,700\) thousand

b. Collections from customers on account, \(\$ 6,300\) thousand

c. Bad debt expense, \(\$ 335\) thousand

d. Write-offs of uncollectible accounts receivable, \(\$ 300\) thousand

e. Recovered an account receivable, \(\$ 5\) thousand

f. On December 1, Brubacher received a 2 month, \(7 \%, \$ 45\) thousand note receivable from one of its large customers in exchange for the customer's past due account. Brubacher made the proper year-end adjusting entry for the interest on this note.
3. Post to the Accounts Receivable and Allowance for Uncollectibles I-accounts.
4. Compute the ending balances for the two I-accounts, and compare to the Brubacher Service amounts at December 31, 2020. They should be the same.
5. Show what Brubacher should report on its income statement for the year ended December 31, 2020.
6. Recommend several ways for Brubacher to improve cash collections from receivables.

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Financial Accounting

ISBN: 9780135433065

7th Canadian Edition

Authors: Walter Harrison, Wendy Tietz, C. Thomas, Greg Berberich, Catherine Seguin

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