STEPS (ASSUME COMPANY USES AN ALLOWANCE METHOD) 1. Place beginning balances into T-accounts (see yellow) 2A. Record entries below. (A to D ) 2B. Post entries into t-accounts (on right) BEG. BALANCES (NOT INCLUDED IN T-ACCOUNTS YET) 3. Calculate total balances of t-accounts. Accounts receivable (beginning balance) 4. Finish E,F, and G. Allowance for doubtful accounts (beginning balance) $142,000 Instructions A1. Record net credit sales of $945,000. A2. Record cash collections from customers in the amount of $910,000. B. Write off accounts receivable in the amount of $5,200 C. Collect $1,900 from accounts previously written off. [HINT - TWO ENTRIES] D. Prepare the entry to record bad debt expense for the period. The company uses a sales approach with 2% of net credt sales being deemed perhaps uncollectable. E. Determine the ending balances in Accounts Receivable and Allowance for Doubtful Accounts. F. What is the net realizable value of the receivables at the end of the period? G. Calculate the Accounts Receivable Turnover and Days in Accounts Receivable Accounts Receivable Turnover = Sales / Accounts Receivable Days in Accounts Receivable =360/ Accounts Receivable Turnover $142,000 11,360 \begin{tabular}{|r|r|r} & \multicolumn{2}{|c}{ CASH } \\ \cline { 2 - 3 } A2 & & \\ \hline & & \\ & & \\ \hline \end{tabular} A2 B C C ALLOWANCE FOR D.F. ACCOUNTS beg. beg. beg. ACCTS RECEIVABLE 142,000 A1 +2 B C \begin{tabular}{|c|c|c|c|} \hline & \multicolumn{2}{|c|}{\begin{tabular}{l} ALLOWANCE FOR D.F. \\ ACCOUNTS \end{tabular}} & \\ \hline beg. & & 11,360 & beg \\ \hline \multicolumn{4}{|l|}{ B } \\ \hline & & & C \\ \hline & & & D \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & \multicolumn{2}{|c|}{ SALES } & \\ \hline & & & A1 \\ \hline & & & \\ \hline & & & \\ \hline & BAD DEBT & T EXPENSE & \\ \hline \multicolumn{4}{|l|}{D} \\ \hline & & & \\ \hline \multicolumn{4}{|c|}{ CHECK FIGURES } \\ \hline \multicolumn{4}{|c|}{ BAD DEBT EXPENSE: $18,900} \\ \hline \multicolumn{3}{|c|}{ ALLOWANCE FOR D.F. ACCOUNTS $26,960} & \\ \hline N.R.V. & $144,840 & & \\ \hline \multicolumn{2}{|c|}{ DAYS IN INVENTORY } & \multicolumn{2}{|c|}{ aprox 65.45 days } \\ \hline \end{tabular}