At December 31, 2017, Pembina Imports Inc. reported this information on its balance sheet. $645,000 Accounts receivable Less: Allowance for doubtful accounts 42,000 During 2018, the company had the following summary transactions related to receivables and sales. Pembina uses the perpetual inventory system. Sales on account amounted to $2,463,000. The cost of the inventory sold was $1,921,140. 1. Sales returns and allowances with a total sales price of $39.000 and a cost of $30,420 were restored to inventory. 2. 3. Collections of accounts receivable were $2,174,000. 4. Write-offs of accounts receivable deemed uncollectible, $47,200. Recovery of bad debts previously written off as uncollectible, $14,500. 5. (a) Your answer is correct. Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit 1. 2463000 Accounts Receivable Sales 2463000 (b) Your answer is correct. Enter the January 1, 2018, balances in Accounts Receivable and Allowance for Doubtful Accounts, post the entries to the two accounts (use T accounts), and determine the balances before any year-end adjustments. (Post entries in the order of journal entries presented in the previous question.) Accounts Receivable Beg. Bal. 645000 (2) 39000 (1) 2463000 (3) 2174000 (5) (4) 14500 47200 (5) 14500 End, Bal, 847800 Allowand Doubtful Accounts Beg. Bal. (4) 47200 42000 (5) 14500 End. Bal. 9300 (c) Your answer is correct. Prepare the journal entry to record bad debts expense for 2018, assuming that aging the accounts receivable indicates that estimated uncollectible accounts receivable are $46,900. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit Bad Debts Expense 37600 37600 Allowance for Doubtful Accounts eTextbook and Media List of Accounts Attempts: 1of 2 used (d) x Your answer is incorrect. Calculate the receivables turnover ratio and average collection period. (Round receivables turnover to 1 decimal place, e.g. 5.2. Round average collection period to nearest whole day, e.g. 15.) Receivables turnover ratio times 3.5 Average collection period days 104 eTextbook and Media List of Accounts Attempts: 1 of 2 used Check Answer Save for Later
