Question
At December 31, 20X0, Oettinger Corporation, a premium kitchen cabinetmaker for the home remodeling industry, reported the following accounts receivable information on its year-end
At December 31, 20X0, Oettinger Corporation, a premium kitchen cabinetmaker for the home remodeling industry, reported the following accounts receivable information on its year-end balance sheet: Gross accounts receivable Less: Allowance for credit losses Accounts receivable (net) $850,000 (25,000) $825,000 During 20X1, the company had credit sales of $8,200,000 of which it collected $7,975,000. Oettinger employs the sales revenue approach to estimate its bad debt provisions and, continuing to use the same 1% used in previous years, made the normal adjustment at the end of 20X1. Although 20X1 started off well, the industry experienced a slowdown in the last four months of the year, and cash collections consequently dropped off substantially. Moreover, a major customer, which owed Oettinger $85,000, unexpectedly filed for bankruptcy and went out of business during November, at which time its account was written off. Oettinger's controller is concerned that some customers are experiencing cash flow problems and that the company's allowance for credit losses is too low. As a result, she prepared the following schedule: % of Accounts Receivable Balance Number of Days Past Estimated % Due Collectible 20% 0-30 98% 40 31-60 95 35 61-90 85 3 91-120 75 2 Over 120 50 50 Record the entry for the write-off of credit losses. Note: Enter debits before credits. Transaction C. General Journal Debit Credit Record the entry for collections of accounts receivable. Note: Enter debits before credits. Transaction b. General Journal Debit Credit Prepare a journal entry for each transaction affecting the accounts receivable balance for 20×1. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 Record the entry for sales on account. Note: Enter debits before credits. Transaction a. General Journal Debit Credit > At December 31, 20X0, Oettinger Corporation, a premium kitchen cabinetmaker for the home remodeling industry, reported the following accounts receivable information on its year-end balance sheet: Gross accounts receivable Less: Allowance for credit losses Accounts receivable (net) $850,000 (25,000) $825,000 During 20X1, the company had credit sales of $8,200,000 of which it collected $7,975,000. Oettinger employs the sales revenue approach to estimate its bad debt provisions and, continuing to use the same 1% used in previous years, made the normal adjustment at the end of 20X1. Although 20X1 started off well, the industry experienced a slowdown in the last four months of the year, and cash collections consequently dropped off substantially. Moreover, a major customer, which owed Oettinger $85,000, unexpectedly filed for bankruptcy and went out of business during November, at which time its account was written off. Oettinger's controller is concerned that some customers are experiencing cash flow problems and that the company's allowance for credit losses is too low. As a result, she prepared the following schedule: % of Accounts Receivable Balance Number of Days Past Estimated % Due Collectible 20% 0-30 98% 40 31-60 95 35 61-90 85 3 91-120 75 2 Over 120 50 50 Record the entry for the write-off of credit losses. Note: Enter debits before credits. Transaction C. General Journal Debit Credit Record the entry for collections of accounts receivable. Note: Enter debits before credits. Transaction b. General Journal Debit Credit Prepare a journal entry for each transaction affecting the accounts receivable balance for 20×1. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 1 2 3 Record the entry for sales on account. Note: Enter debits before credits. Transaction a. General Journal Debit Credit >
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