Tull Bros. uses the allowance method to account for uncollectible accounts expense. Tull experienced the following four
Question:
Tull Bros. uses the allowance method to account for uncollectible accounts expense. Tull experienced the following four events in Year 1:
1. Recognized $68,000 of revenue on account.
2. Collected $62,000 cash from accounts receivable.
3. Determined that $500 of accounts receivable were not collectible and wrote them off.
4. Recognized uncollectible accounts expense for the year. Tull estimates that uncollectible accounts expense will be 2 percent of its sales.
Required
Show the effect of each of these events on the elements of the financial statements, using a horizontal statements model like the following one. Use + for increase, − for decrease, and NA for not affected. In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA).
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...
Step by Step Answer:
Event Assets Liab Equity Rev Exp Ne...View the full answer
Introductory Financial Accounting for Business
ISBN: 978-1260299441
1st edition
Authors: Thomas Edmonds, Christopher Edmonds
