Rita Inc. made $900,000 in sales during 2016. Twenty-five percent of these were cash sales. During the
Question:
Rita Inc. made $900,000 in sales during 2016. Twenty-five percent of these were cash sales. During the year, $22,500 of accounts receivable were written off as being uncollectible. In addition, $13,500 of the accounts that were written off in 2015 were unexpectedly collected. At its’ year-end December 31, 2016, Timken had $225,000 of accounts receivable. The balance in the Allowance for Doubtful Accounts general ledger account was $13,500 credit at December 31, 2015.
Age (days) | Accounts Receivable |
1-30 | $ 90,000 |
31-60 | 45,000 |
61-90 | 22,500 |
91-120 | 54,000 |
Over 120 | 13,500 |
Total | $225,000 |
Required:
Prepare journal entries to record the following 2016 transactions:
The write-off of $22,500
The recovery of $13,500
Recalculate the balance in the Allowance for Doubtful Accounts general ledger account at December 31, 2016.
The estimated uncollectible accounts at December 31, 2016 are calculated as follows:
Age (days) | Estimated Loss percentage |
1-30 | 1.5% |
31-60 | 3% |
61-90 | 4% |
91-120 | 9% |
Over 120 | 45% |
Required: Prepare the adjusting entry required at December 31, 2016.
( Please provide all calculations and explications)
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon