Accounting for uncollectible accounts using the allowance method (percent-of-sales) and reporting receivables on the balance sheet

At January 1, 2013, Mary's Local Store had Accounts Receivable of $ 34,000 and Allowance for Bad Debts had a credit balance of $ 3,000. During the year, Mary's Local Store recorded the following:

a. Sales of $189,000 ($165,000 on account; $ 24,000 for cash).
b. Collections on account, $ 133,000.
c. Write-offs of uncollectible receivables, $ 2,800.

Requirements
1. Journalize Mary’s transactions that occurred during 2013. The company uses the allowance method.
2. Post Mary’s transactions to the Accounts Receivable and Allowance for Bad Debts T-accounts.
3. Journalize Mary’s adjustment to record bad debts expense assuming Mary estimates bad debts as 1% of credit sales. Post the adjustment to the appropriate T- accounts.
4. Show how Windy Mountain Flagpoles will report net accounts receivable on its December 31, 2015 balance sheet.

Answer rating: 100% (QA)

1 January 1 2013 Allowance for Bad Debts 3000 Accounts Receivable 34000 Sales January 2 2013 Account... View the full answer