a. Mantle Company has been in business several years. At the end of the current year, the

Question:

a. Mantle Company has been in business several years. At the end of the current year, the unadjusted trial balance shows:
Accounts Receivable...................................$310,000 Dr
Sales Revenue..........................................2,200,000 Cr.
Allowance for Doubtful Accounts........................5,700 Cr.
Bad debts are estimated to be 7% of receivables. Prepare the entry to adjust Allowance for Doubtful Accounts.
b. Neumann Distributors is a growing company whose ability to raise capital has not been growing as quickly as its expanding assets and sales. Neumann's local banker has indicated that the company cannot increase its borrowing for the foreseeable future. Neumann's suppliers are demanding payment for goods acquired within 30 days of the in- voice date, but Neumann's customers are slow in paying for their purchases (60-90 days). As a result, Neumann has a cash flow problem.
Neumann needs $160,000 to cover next Friday's payroll. Its balance of outstanding totals $800,000. To alleviate this cash crunch, the company sells $170,000 of its receivables. Record the entry that Neumann would make. (Assume a 2% service charge.)
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...