Luxton Supplies showed the following selected adjusted balances as its December 31, 2004 year-end: Accounts Receivable...

  

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Luxton Supplies showed the following selected adjusted balances as its December 31, 2004 year-end: Accounts Receivable Dec 31/04 Balance 249,000 Allowance for Doubtful Accounts 8,340 Dec 31/04 Balance During the year 2005, the following selected transactions occurred: a) Sales totaled $1,480,000 of which 20% were cash sales (cost of sales $902,000) b) Sales returns and allowances were $57,000, half regarding credit sales c) An account for $12,000 was recovered d) Several accounts were written off; $19,500 e) Collections from credit customers totaled $940,000 (excluding the recovery in (c) above) Part A Required: 1. Journalize the above transactions. 2. Prepare the December 31, 2005 adjusting entry to estimate bad debts assuming that uncollectible accounts are estimated to be 1.5% of net credit sales. 3. Show how the accounts receivable will appear on the December 31, 2005 balance sheet. Part B Required: (independent of above) 1. Prepare the December 31, 2005, adjusting entry to estimate bad debts assuming that uncollectible accounts are estimated to be 3% of outstanding receivables. 2. Show how the accounts receivable will appear on the December 31, 2005 balance sheet. Luxton Supplies showed the following selected adjusted balances as its December 31, 2004 year-end: Accounts Receivable Dec 31/04 Balance 249,000 Allowance for Doubtful Accounts 8,340 Dec 31/04 Balance During the year 2005, the following selected transactions occurred: a) Sales totaled $1,480,000 of which 20% were cash sales (cost of sales $902,000) b) Sales returns and allowances were $57,000, half regarding credit sales c) An account for $12,000 was recovered d) Several accounts were written off; $19,500 e) Collections from credit customers totaled $940,000 (excluding the recovery in (c) above) Part A Required: 1. Journalize the above transactions. 2. Prepare the December 31, 2005 adjusting entry to estimate bad debts assuming that uncollectible accounts are estimated to be 1.5% of net credit sales. 3. Show how the accounts receivable will appear on the December 31, 2005 balance sheet. Part B Required: (independent of above) 1. Prepare the December 31, 2005, adjusting entry to estimate bad debts assuming that uncollectible accounts are estimated to be 3% of outstanding receivables. 2. Show how the accounts receivable will appear on the December 31, 2005 balance sheet.

Answer rating: 100% (QA)

To determine the adjusted balances for Accounts Receivable and Allowance for Doubtful Accounts at December 31 2005 we need to consider the transactions that occurred during the year 2005 Lets analyze each transaction ... View the full answer