Accounting for uncollectible accounts using the allowance method (percent-of-sales) and reporting receivables on the balance sheet At
Question:
Accounting for uncollectible accounts using the allowance method (percent-of-sales) and reporting receivables on the balance sheet
At January 1, 2015, Windy Mountain Flagpoles had Accounts Receivable of $ 34,000 and Allowance for Bad Debts had a credit balance of $ 3,000. During the year, Windy Mountain Flagpoles recorded the following:
a.Sales of $189,000 ($165,000 on account; $ 24,000 for cash).
b.Collections on account, $ 133,000.
c.Write-offs of uncollectible receivables, $ 2,800.
Requirements
1.Journalize Windy's transactions that occurred during 2015. The company uses the allowance method.
2.Post Windy's transactions to the Accounts Receivable and Allowance for Bad Debts T-accounts.
3.Journalize Windy's adjustment to record bad debts expense assuming Windy estimates bad debts as 1% of credit sales. Post the adjustment to the appropriate T- accounts.
4.Show how Windy Mountain Flagpoles will report net accounts receivable on its December 31, 2015 balance sheet.
Requirement 1
a.Sales of $189,000 ($165,000 on account; $24,000 for cash).
Date
Account
Debit
Credit
Record sales for the year
b.Collections on account, $133,000.
Date
Account
Debit
Credit
Collected cash on account
c.Write-offs of uncollectible receivables, $2,800.
Date
Account
Debit
Credit
Wrote off uncollectible accounts
Requirement 2
Accounts Receivable
Allowance for Bad Debts
Requirement 3
Date
Account
Debit
Credit
Recorded bad debts expense for the period
Allowance for Bad Debts
Bad Debts Expense
Requirement 4
WINDY MOUNTAIN FLAGPOLES
Balance SheetPartial
December 31, 2015
Assets
Current Assets
Accounts Receivable
Less: Allowance for Bad Debts