Comprehensive Receivables Problem Blackmon Corporation’s December 31, 2015, balance sheet disclosed the following information relating to its receivables:

*The company has a recourse liability of $700 related to a note receivable sold to a bank.

During 2016, credit sales (terms, n/EOM) totaled $2,200,000, and collections on accounts receivable (unassigned) amounted to $1,900,000. Uncollectible accounts totaling $18,000 from several customers were written off, and a $1,350 accounts receivable previously written off was collected. Additionally, the following transactions relating to Blackmon’s receivables occurred during the year:

On December 31, 2016, an aging of the accounts receivable balance indicated the following:

Required:

1. Prepare the journal entries to record the preceding receivable transactions during 2016 and the necessary adjusting entry on December 31, 2016. Assume a 360-day year for interest calculations and round calculations to the nearest dollar.

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2. Prepare the receivables portion of Blackmon’s December 31, 2016, balance sheet.

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3. Compute Blackmon’s accounts receivable turnover in days, assuming a 360-day business year. What is your evaluation of its collection policies?

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4. If Blackmon uses IFRS, what might be the heading of the section for the receivables reported in Requirement 2?
 

Transcribed Image Text:

$245,000 (15,000) Accounts receivable Less: Allowance for doubtful accounts Notes receivable* Total receivables $230,000 50,000 $280,000 $245,000 (15,000) Accounts receivable Less: Allowance for doubtful accounts Notes receivable* Total receivables $230,000 50,000 $280,000

Answer rating: 100% (QA)

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