At January 1, 2018, Underwood Imports Inc. reported the following on its statement of financial position:
Accounts receivable..................................$1,760,000
Allowance for doubtful accounts..................118,000
During 2018, the company had the following summary transactions for receivables:
1. Sales on account, $5,400,000; Cost of goods sold, $2,970,000
2. Sales returns and allowances, $80,000; Cost of goods returned to inventory, $44,000
3. Collections of accounts receivable, $5,400,000
4. Interest added to overdue accounts, $400,000
5. Write offs of accounts receivable deemed uncollectible, $160,000
6. Collection of accounts previously written off as uncollectible, $72,000
7. After considering all of the above transactions, total estimated uncollectible accounts, $104,000
Instructions
(a) Prepare journal entries to record each of the above summary transactions.
(b) 1. Prepare T accounts for Accounts Receivable and Allowance for Doubtful Accounts
2. Enter the opening balances
3. Post the above summary entries
4. Determine the ending balances.
(c) Determine the carrying amount of the accounts receivable as at January 1 and December 31.
(d) Show the statement of financial position presentation of the receivables as at December 31.
(e) Show the income statement presentation of the revenue and expense accounts for the year ended December 31.