Accounting for uncollectible accounts using the allowance method (percentage of sales), and reporting receivables on the balance sheet Beta Watches completed the following selected transactions during 2011 and 2012:
|
2011 |
|
|
Dec 31 |
Estimated that uncollectible account expense for the year was 3% of credit |
|
|
sales of $440,000 and recorded that amount as expense. Use the allowance method. |
|
31 |
Made the closing entry for uncollectible account expense. |
|
2012 |
|
|
Jan 17 |
Sold inventory to Manny Vasquez, $800, on account. Ignore cost of goods sold. |
|
Jun 29 |
Wrote off Manny Vasquez’s account as uncollectible after repeated efforts to collect from him. |
|
Aug 6 |
Received $800 from Manny Vasquez, along with a letter apologizing for being |
|
|
so late. Reinstated Vasquez’s account in full and recorded the cash receipt. |
|
Dec 31 |
Made a compound entry to write off the following accounts as uncollectible: |
|
|
Bill Kappy, $1,400; Mike Venture, $1,100; and Russell Reeves, $200. |
|
31 |
Estimated that uncollectible account expense for the year was 3% on credit |
|
|
sales of $470,000 and recorded the expense. |
|
31 |
Made the closing entry for uncollectible account expense. |
Requirements
1. Open T accounts for Allowance for uncollectible accounts and Uncollectible account expense. Keep running balances, assuming all accounts begin with a zero balance.
2. Record the transactions in the general journal, and post to the two T accounts.
3. Assume the December 31, 2012, balance of Accounts receivable is $139,000. Show how net Accounts receivable would be reported on the balance sheet at that date. Use the three line format of reporting the net accounts receivable.