Accounting Help

P9-1B, A-D

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PLEASE USE THE METHOD BELOW FOR THIS PROBLEM

P9-1B At December 31, 2011, Artie Kendall Imports reported the following information on its balance sheet. Accounts receivable $250,000 Less: Allowance for doubtful accounts 15,000 During 2012, the company had the following transactions related to receivables. 1. Sales on account $2,400,000 2. Sales returns and allowances 45,000 3 Collections of accounts receivable 2,250,000 4. Write-offs of accounts receivable deemed uncollectible 12,000 3,000 5. Recovery of bad debts previously written off as uncollectible Instructions (a) Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. (b) Enter the January 1, 2012, balances in Accounts Receivable and Allowance for Doubtful Accounts. Post the entries to the two accounts (use T accounts), and determine the balances. (c) Prepare the journal entry to record bad debts expense for 2012, assuming that an aging of accounts receivable indicates that estimated bad debts are $22,000. (d) Compute the accounts receivable turnover ratio for the year 2012. PROBLEM 9-1A (a) 1. Accounts Receivable Sales Revenue 3,200,000 3,200,000 2. Sales Returns and Allowances 50,000 Accounts Receivable 50,000 3. Cash 2,810,000 Accounts Receivable 2,810,000 4. Allowance for Doubtful Accounts 90,000 Accounts Receivable 90,000 5. Accounts Receivable 24,000 Allowance for Doubtful Accounts 24,000 Cash 24,000 Accounts Receivable 24,000 (b) Accounts Receivable Allowance for Doubtful Accounts Bal. 960,000 (2) 50,000 (4) 90,000 Bal. 80.000 (1) 3,200,000 (3) 2,810,000 |(5) 24,000 (5) 24,000 |(4) 90,000 (5) 24,000 Bal. 1,210,000 Bal. 14,000 PROBLEM 9-1A (Continued) $ (c) Balance before adjustment (see (b)] 14,000 Balance needed 115,000 Adjustment required $101,000 The journal entry would therefore be as follows: Bad Debts Expense 101,000 Allowance for Doubtful Accounts 101,000 $3,200,000 - $50,000 ($880,000+ $1,095,000) = 2 $3,150,000 $987,500 = 3.19 times (d)