Fan-Tastic Sports Gear Inc. recorded $3,100,000 of sales last year and projects sales to increase by $350,000 in the current year. Last year, 80% of sales were on account, with over 300 customer accounts. Bad debt expense was $26,187.

1. Assume that Fan-Tastic Sports Gear Inc. used the allowance method last year, and the allowance account at the end of the year had a debit balance of $2,240. The company estimated uncollectible accounts expense using the percent of credit sales method and expected 0.75% of credit sales to be uncollectible. What is the amount of the adjusting entry to provide for doubtful accounts on December 31? Round all computations to the nearest dollar. $...........

2. How much higher (lower) would Fan-Tastic Sports Gear Inc.’s net income have been under the allowance method assumption previously shown in (1) than under the direct write-off method? (Enter “0” if there is no change.)  Lower/Higher by $..............

3. Using the allowance method, the net realizable value of the receivables would appear on which financial statement? 

Answer rating: 100% (QA)

1 Expected sales in current year a 3100000 350000 3450000 Expected Credit Salesb 3450... View the full answer