Jayco Inc. started its operations in 2016. Its sales, all on account, totalled $700,000. The company...
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Jayco Inc. started its operations in 2016. Its sales, all on account, totalled $700,000. The company collected $500,000 in cash from customers during the year and wrote off $8,000 in uncollectible accounts. The company set up an allowance for doubtful accounts at December 31, 2016, its fiscal year end, and determined the account balance to be $14,000. The unadjusted balances of selected accounts at December 31, 2017, are as follows: Accounts receivable $300,000 Allowance for doubtful accounts (debit) 10,000 Sales revenue (including 80 percent in sales on account) 800,000 Aging of the accounts receivable on December 31, 2017, resulted in an estimate of $11,000 in potentially uncollectible accounts. Required: 1. Prepare the journal entries to record all the transactions during 2016 and post them to appropriate T-accounts. 2. Prepare the journal entries to record all the transactions during 2017 and post them to appropriate T-accounts. 3. Compute the receivables turnover ratio and the average collection period for 2017, and comment on the results. 4. Does the write-off of accounts receivable affect the current ratio? Explain. 5. Does the recording of bad debt expense affect the receivables turnover ratio? Explain. Jayco Inc. started its operations in 2016. Its sales, all on account, totalled $700,000. The company collected $500,000 in cash from customers during the year and wrote off $8,000 in uncollectible accounts. The company set up an allowance for doubtful accounts at December 31, 2016, its fiscal year end, and determined the account balance to be $14,000. The unadjusted balances of selected accounts at December 31, 2017, are as follows: Accounts receivable $300,000 Allowance for doubtful accounts (debit) 10,000 Sales revenue (including 80 percent in sales on account) 800,000 Aging of the accounts receivable on December 31, 2017, resulted in an estimate of $11,000 in potentially uncollectible accounts. Required: 1. Prepare the journal entries to record all the transactions during 2016 and post them to appropriate T-accounts. 2. Prepare the journal entries to record all the transactions during 2017 and post them to appropriate T-accounts. 3. Compute the receivables turnover ratio and the average collection period for 2017, and comment on the results. 4. Does the write-off of accounts receivable affect the current ratio? Explain. 5. Does the recording of bad debt expense affect the receivables turnover ratio? Explain.
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1 Journal Entries for 2016 Date Accounts Title Debit Credit 1 Accounts Receivable 700000 Sales reven... View the full answer
Related Book For
Financial Accounting An Introduction to Concepts, Methods and Uses
ISBN: 978-1133591023
14th edition
Authors: Roman L. Weil, Katherine Schipper, Jennifer Francis
Posted Date:
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