At the end of 2012, Extreme Fitness has adjusted balances of $800,000 in Accounts Receivable and $55,000

Question:

At the end of 2012, Extreme Fitness has adjusted balances of $800,000 in Accounts Receivable and $55,000 in Allowance for Doubtful Accounts. On January 2, 2013, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $10,000.
a. Show how the company would have reported its receivable accounts on December 31, 2012. As of that date, what amount did Extreme Fitness expect to collect?
b. Prepare the journal entry to write off the accounts on January 2, 2013.
c. Assuming no other transactions occurred between December 31, 2012, and January 3, 2013, show how Extreme Fitness would have reported its receivable accounts on January 3, 2013. As of that date, what amount did Extreme Fitness expect to collect? Has this changed from December 31, 2012? Explain why or why not.
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...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Fundamentals of Financial Accounting

ISBN: 978-0078025372

4th edition

Authors: Fred Phillips, Robert Libby, Patricia Libby

Question Posted: