ACCOUNTS RECEIVABLEUNCOLLECTIBLE ACCOUNTS

Instructions: Present the journal entries specified below; show supporting calculations.

The trial balance of Sophia Company at December 31, 2014 includes the following:

Debits Credits

Accounts Receivable .................................................................. 100,000

Allowance for Doubtful Accounts ............................................... 500

Sales (all on credit) ..................................................................... 700,000

Sales Returns and Allowances .................................................. 30,000

(1) If Sophia uses the aging method and estimates that $6,000 of receivables will be uncollectible, prepare the adjusting entry.

(2) If Sophia estimates uncollectibles at 1% of net credit sales, prepare the appropriate adjusting entry.

(3) Assume that on February 10, 2015 the specific account of Mark Nolan with a balance of $600, is deemed uncollectible. Record the write-off.

(4) Assume that on May 12, 2015 Nolan pays one-half of the above balance in full and is expected to pay the remainder within 30 days. Record the appropriate entries.

B. SALE OF ACCOUNTS RECEIVABLE

Instructions: Present the journal entries specified below.

(1) Rosen Company sells $600,000 of accounts receivable to National Factors, Inc. for cash less a 2.5% service charge. Record the sale.

(2) Made Visa credit card sales totaling $9,500. A 2% service fee is charged by Visa. Record the sale on the books of Rosen Company.