This problem takes you through the accounting for sales, receivables, and uncollectibles for Quick Mail Corp., the
Question:
During the year ended July 31, 2013, Quick Mail Corp. earned service revenue and collected cash from customers. Assume uncollectible-account expense for the year was 4% of service revenue and that Quick Mail wrote off uncollectible receivables. At year-end, Quick Mail ended with the foregoing July 31, 2013, balances.
Requirements
1. Prepare T-accounts for Accounts Receivable and Allowance for Uncollectible Accounts and insert the July 31, 2012, balances as given.
2. Journalize the following assumed transactions of Quick Mail Corp. for the year ended July 31, 2013 (explanations are not required):
a. Service revenue on account, $32,480 million
b. Collections from customers on account, $30,880 million
c. Uncollectible-account expense, 4% of service revenue
d. Write-off s of uncollectible accounts receivable, $1,340 million
3. Post your entries to the Accounts Receivable and the Allowance for Uncollectible Accounts T-accounts.
4. Compute the ending balances for Accounts Receivable and the Allowance for Uncollectible Accounts and compare your balances to the actual July 31, 2013, amounts. They should be the same.
5. Show what Quick Mail would report on its income statement for the year ended July 31,2013.
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Financial accounting
ISBN: 978-0132751124
9th edition
Authors: Walter T. Harrison Jr., Charles T. Horngren, C. William Thom