Selected unadjusted account balances at December 31, 2023, are shown below for Demron Servicing. Required a. Demron
Question:
Selected unadjusted account balances at December 31, 2023, are shown below for Demron Servicing.
Required
a. Demron estimates that 1.5% of net credit sales will prove to be uncollectible. Prepare the adjusting entry required on December 31, 2023, to estimate uncollectible receivables.
b. During 2024, credit sales were $620,000 (cost of sales $406,500); sales discounts of $12,000 were taken when accounts receivable of $440,000 were collected; and accounts written off during the year totaled $10,000. Prepare the entries for these transactions.
c. Record the adjusting entry required on December 31, 2024 to estimate uncollectible receivables, assuming it is based on 1.5% of net credit sales.
d. Show how accounts receivable would appear on the December 31, 2024, balance sheet.
Analysis Component:
Comment on the advantages and disadvantages of using the income statement approach for estimating uncollectibles.
Step by Step Answer:
Fundamental Accounting Principles Volume 1
ISBN: 9781260881325
17th Canadian Edition
Authors: Kermit D. Larson, Heidi Dieckmann, John Harris