Question

The accounts of Polaris Company provided the following 20X5 information at 31 December 20X5:
Accounts receivable ............... $ 1,899,000 (dr.)
Allowance for sales discounts ........... 23,500 (cr.)
Allowance for sales returns ............. 5,700 (cr.)
Allowance for doubtful accounts........... 134,900 (cr.)
Total credit sales revenue during 20X5....... 23,589,000
Investigation showed the following:
a. Examination of an aging of accounts receivable showed that accounts of $ 106,200 should be written off. Of the remaining balance, $ 216,000 was doubtful at year- end.
b. Estimated sales discounts inherent in the closing accounts receivable balance were $ 17,200. Terms of 1/ 10, n/ 45 were granted to customers. Accounts receivable were recorded gross, and the discounts taken were recorded when taken by the customers in a discounts account, reported contra to the sales account.
c. Customers are allocated sales allowances when goods have laws. Based on past experience, $ 9,500 of price reductions might be given. When price reductions are granted during the year, the sales returns account, a contra account to sales, is increased.

Required:
1. Prepare year- end adjusting entries with respect to accounts receivable and the related allowances.
2. Show how the net accounts receivable appear on the statement of financial position on 31 December 20X5.



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  • CreatedFebruary 17, 2015
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