Food and Stuff Co. had the following normal balances on January 1, 2014: Accounts Receivable: $1,000,000...
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Food and Stuff Co. had the following normal balances on January 1, 2014: Accounts Receivable: $1,000,000 Allowance for doubtful accounts: $20,000 During January, Food and Stuff Co. collected $300,000 of their receivables. Food and Stuff Co. also made cash sales of $500,000 and credit sales of $400,000. Food and Stuff Co. wrote off $5,000 in receivables on January 10th and collected an additional $3,000 in receivables that were previously written off on January 20th. On January 2, Food and Stuff Co. factored $250,000 of their receivables with Pawnee Finance, Inc. The factoring agreement was with recourse. Pawnee Finance, Inc. assessed a 2% finance charge and retained 3% of the factored receivables to protect against sales discounts or retums. Food and Stuff Co. believes 4% of the factored receivables will be uncollectable (i.e., the fair value of the recourse provision). Sales retums and discounts for the month totaled $1,000. At the end of the month, Food and Stuff Co. estimates bad debt expense as 3% of A/R using the Balance Sheet method (ignoring any Receivable(s) from Factor accounts that may be recorded). Required: 1) Write the journal entry to write off the uncollectible accounts receivable on January 10th. 2) Write the journal entry to recover the receivables previously written off on January 20th. 3) Determine the joumal entry Food and Stuff Co. would record at the time the receivables were factored. 4) Prepare the joumal entry for the month-end adjustment to allowance for doubtful accounts balance. 5) In February, customers return $2,500 of merchandise related to receivables factored to Food and Stuff. What entries does Food & Stuff Co make to account for this? Food and Stuff Co. had the following normal balances on January 1, 2014: Accounts Receivable: $1,000,000 Allowance for doubtful accounts: $20,000 During January, Food and Stuff Co. collected $300,000 of their receivables. Food and Stuff Co. also made cash sales of $500,000 and credit sales of $400,000. Food and Stuff Co. wrote off $5,000 in receivables on January 10th and collected an additional $3,000 in receivables that were previously written off on January 20th. On January 2, Food and Stuff Co. factored $250,000 of their receivables with Pawnee Finance, Inc. The factoring agreement was with recourse. Pawnee Finance, Inc. assessed a 2% finance charge and retained 3% of the factored receivables to protect against sales discounts or retums. Food and Stuff Co. believes 4% of the factored receivables will be uncollectable (i.e., the fair value of the recourse provision). Sales retums and discounts for the month totaled $1,000. At the end of the month, Food and Stuff Co. estimates bad debt expense as 3% of A/R using the Balance Sheet method (ignoring any Receivable(s) from Factor accounts that may be recorded). Required: 1) Write the journal entry to write off the uncollectible accounts receivable on January 10th. 2) Write the journal entry to recover the receivables previously written off on January 20th. 3) Determine the joumal entry Food and Stuff Co. would record at the time the receivables were factored. 4) Prepare the joumal entry for the month-end adjustment to allowance for doubtful accounts balance. 5) In February, customers return $2,500 of merchandise related to receivables factored to Food and Stuff. What entries does Food & Stuff Co make to account for this?
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Answer 1 Write the journal entry to write off the uncollectible accounts receivable on January 10th ... View the full answer
Related Book For
Intermediate Accounting 2014 FASB Update
ISBN: 978-1118147290
15th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
Posted Date:
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