Silk Co. reported the following information on its December 31, 2014, balance sheet: Accounts receivable ...........................................$760,000 Less:
Question:
Silk Co. reported the following information on its December 31, 2014, balance sheet:
Accounts receivable ...........................................$760,000
Less: Allowance for doubtful accounts ..................... 76,000
During 2015, the company had the following transactions related to receivables:
1. Sales on account, $2,800,000
2. Sales returns and allowances, $325,000
3. Collections of accounts receivable, $2,410,000
4. Interest added to overdue accounts, $72,000
5. Write off s of accounts considered uncollectible, $58,400
6. Collection of accounts previously written off as uncollectible, $5,200
Instructions
(a) Prepare the summary journal entries to record each of these six transactions.
(b) Enter the December 31, 2014, balances in the Accounts Receivable and Allowance for Doubtful Accounts general ledger accounts, post the entries to the two accounts, and determine the balances.
(c) Calculate the net realizable value of accounts receivable at December 31, 2015. Uncollectible accounts are estimated at 10% of accounts receivable.
(d) Prepare the journal entry to record bad debt expense for 2015.
(e) Show the balance sheet presentation of the receivables as at December 31, 2015.
TAKING IT FURTHER
For several years, Silk Co. has estimated uncollectible accounts at 10% of accounts receivable. Discuss whether or not the company should continue to do this at December 31, 2015.
Accounts ReceivableAccounts 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... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
a 1 Accounts Receivable 2800000 Sales 2800000 2 Sales Returns and Allowances 325000 Accounts Receiva...View the full answer
Accounting Principles Part 2
ISBN: 978-1118306796
6th Canadian edition Volume 1
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow
