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Gaga began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections,
Gaga began operations in Year 1. During its first two years, the company completed a number of transactions involving sales on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows. Year 1
- Sold $1,347,700 of merchandise on credit (that had cost $983,600), terms n/30.
- Wrote off $18,900 of uncollectible accounts receivable.
- Received $669,600 cash in payment of accounts receivable.
- In adjusting the accounts on December 31, the company estimated that 1.60% of accounts receivable would be uncollectible.
Year 2
- Sold $1,510,000 of merchandise (that had cost $1,287,300) on credit, terms n/30.
- Wrote off $30,700 of uncollectible accounts receivable.
- Received $1,313,500 cash in payment of accounts receivable.
- In adjusting the accounts on December 31, the company estimated that 1.60% of accounts receivable would be uncollectible.
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