Refer to the information in E519, but now assume that the balance of the Allowance for Uncollectible
Question:
Refer to the information in E5–19, but now assume that the balance of the Allowance for Uncollectible Accounts on December 31, 2015, is $1,100 (debit) (before adjustment).
In E5–19, Suzuki Supply reports the following amounts at the end of 2015 (before adjustment).
Credit Sales for 2015.................. $260,000
Accounts Receivable, December 31, 2015............. 55,000
Allowance for Uncollectible Accounts, December 31, 2015.....1,100(credit)
Required:
1. Record the adjustment for uncollectible accounts using the percentage-of-receivables method. Suzuki estimates 12% of receivables will not be collected.
2. Record the adjustment for uncollectible accounts using the percentage-of-credit-sales method. Suzuki estimates 3% of credit sales will not be collected.
3. Calculate the effect on net income (before taxes) and total assets in 2015 for each method.
Step by Step Answer:
Financial Accounting
ISBN: 978-0078025549
3rd edition
Authors: J. David Spiceland, Wayne Thomas, Don Herrmann