The accounts receivable balance for T&M Lumber at December 31, 2010, was $96,000. Also on that date,

Question:

The accounts receivable balance for T&M Lumber at December 31, 2010, was $96,000. Also on that date, the balance in the Allowance for Doubtful Accounts was $3,600. During 2011, $2,400 of accounts receivable were written off as uncollectible. In addition, T&M Lumber unexpectedly collected $250 of receivables that had been written off in a previous accounting period. Sales on account during 2011 were $265,000, and cash collections from receivables were $275,000. Uncollectible accounts expense was estimated to be 1 percent of the sales on account for the period.

Required

a. Organize the information in accounts under an accounting equation.

b. Based on the preceding information, compute (after year-end adjustment):

(1) Balance of Allowance for Doubtful Accounts at December 31, 2010.

(2) Balance of Accounts Receivable at December 31, 2010.

(3) Net realizable value of Accounts Receivable at December 31, 2010.

c. What amount of uncollectible accounts expense will T&M Lumber report for 2010?

d. Explain how the $250 recovery of receivables affected the accounting equation.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...