The Majestic Plumbing Company provides plumbing installations for both business and individual customers. The company records sales
Question:
As of December 31, 2019, Accounts Receivable has a balance of $140,750 and Allowance for Doubtful Accounts has a credit balance of $300. The following table provides a breakdown of the credit sales by division for the year 2019 and the estimated rates of loss:
INSTRUCTIONS
1. Compute the estimated amount of losses in uncollectible accounts expense for each of the two types of sales for the year.
2. Prepare an adjusting entry in general journal form to provide for the estimated losses from uncollectible accounts. Use Uncollectible Accounts Expense and Allowance for Doubtful Accounts.
3. Show how Accounts Receivable and Allowance for Doubtful Accounts should appear on the balance sheet of Majestic Plumbing Company as of December 31, 2019.
4. On January 28, 2020, the account receivable of Lonzo Enterprises, amounting to $412, is determined to be uncollectible and is to be written off. Record the transaction in general journal form.
5. On June 15, 2020, the attorneys for Majestic Plumbing Company turned over a check for $200 that they obtained from Lonzo Enterprises in settlement of its account, which had been written off on January 28, 2020. The money has already been entered in the cash receipts journal. Record the general journal entry to reinstate the proper amount of Lonzo€™s account.
Analyze: Assume that Majestic Plumbing Company uses a predetermined 7.0 percent rate on total accounts receivable to compute the estimated amount of uncollectible accounts receivable. What would be the amount charged to Uncollectible Accounts Expense on December 31, 2019?
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:
College Accounting Chapters 1-30
ISBN: 978-1259631115
15th edition
Authors: John Price, M. David Haddock, Michael Farina