On September 30, 2007 (the end of its fiscal year), the Lufkin Corporation reported accounts receivable of $331,750 and an allowance for doubtful accounts of $16,700. During fiscal 2008 the following transactions occurred:

Credit sales (terms, n/EOM) .........$2,017,800

Collections on accounts receivable ....... 1,956,000

Accounts receivable written off ......... 16,200

On September 30, 2008 an aging of the accounts receivable balance indicated the following:

Required
1. Prepare the journal entries necessary to record the credit sales, collections on account, write-off of accounts receivable, and the bad debts expense for Lufkin for fiscal 2008.
2. What are Lufkin's September 30, 2008 balances in Accounts Receivable and in its Allowance for Doubtful Accounts and how will they be disclosed on the September 30, 2008 balance sheet?
3. Compute Lufkin's receivables turnover in days, assuming a 360-day business year (as discussed earlier in the chapter and in the Appendix to Chapter 6). What is your evaluation of its collectionpolicies?

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Estimated Percentage Uncollectible 0.8% Age Under 30 days 30-90 days 91-180 days 181-360 days Over 360 days Amount $169,250 100,000 55,900 38,200 14,000 $377,350 1.6 5.0 15.0 40.0