Textile Imports reported the following information on its December 31, 2014, balance sheet: Accounts receivable ..............................................$1,580,000 Less:

Question:

Textile Imports reported the following information on its December 31, 2014, balance sheet:

Accounts receivable ..............................................$1,580,000

Less: Allowance for doubtful accounts ........................ 94,800

During 2015, the company had the following transactions related to receivables:

1. Sales on account, $4,800,000

2. Sales returns and allowances, $120,000

3. Collections of accounts receivable, $4,700,000

4. Interest added to overdue accounts, $200,000

5. Write off s of accounts deemed uncollectible, $179,000

6. Collection of bad debts previously written off as uncollectible, $24,000

Instructions

(a) Prepare the summary journal entries to record each of these six transactions.

(b) Enter the January 1, 2015, balances in the Accounts Receivable and Allowance for Doubtful Accounts general ledger accounts, post the entries to the two accounts, and determine the balances.

(d) Calculate the net realizable value of accounts receivable at December 31, 2015.

(e) Show the balance sheet presentation of accounts receivable at December 31, 2015.

TAKING IT FURTHER

For several years, Textile Imports has estimated uncollectible accounts at 6% of accounts receivable. Discuss whether or not the company should continue to do this at December 31, 2015.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Balance Sheet
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