Pate Bros. uses the allowance method to account for uncollectible accounts expense. Pate experienced the following four events in 2013:
1. Recognized $68,000 of revenue on account.
2. Collected $62,000 cash from accounts receivable.
3. Determined that $500 of accounts receivable were not collectible and wrote them off.
4. Recognized uncollectible accounts expense for the year. Pate estimates that uncollectible accounts expense will be 2 percent of its sales.
a. Show the effect of each of these events on the elements of the financial statements, using a horizontal statements model like the following one. Use + for increase, for decrease, and NA for not affected. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA).
b. Record the above transactions in general journalform.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...
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Question Posted: October 26, 2013 06:55:30