On September 30, 2013 (the end of its fiscal year), Lufkin Corporation reported accounts receivable of $331,750

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On September 30, 2013 (the end of its fiscal year), Lufkin Corporation reported accounts receivable of $331,750 and an allowance for doubtful accounts of $16,700. During fiscal 2014, 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, 2014, an aging of the accounts receivable balance indicated the following:

On September 30, 2013 (the end of its fiscal year),

Required:
1. Prepare the journal entries necessary to record the credit sales, collections on account, write-off of accounts receivable, and bad debts expense for Lufkin for fiscal 2014.
2. What are Lufkin's September 30, 2014, balances in Accounts Receivable and in its Allowance for Doubtful Accounts, and how will they be disclosed on the September 30, 2014, balance sheet?
3. Compute Lufkin's receivables turnover in days, assuming a 360-day business year. What is your evaluation of its collection policies?

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...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Intermediate Accounting Reporting and Analysis

ISBN: 978-1111822361

1st edition

Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach

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