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Joeys Bike Shop sells new and used bicycle parts. Although a majority of its sales are cash sales, it makes a significant amount of credit
Joeys Bike Shop sells new and used bicycle parts. Although a majority of its sales are cash sales, it makes a significant amount of credit sales. During Year 1, its first year of operations, Joeys Bike Shop experienced the following.
Sales on account | $275,400 |
---|---|
Cash sales | 681,500 |
Collections of accounts receivable | 261,630 |
Uncollectible accounts charged off during the year | 1,305 |
Required
- Assume that Joeys Bike Shop uses the allowance method of accounting for uncollectible accounts and estimates that 1 percent of its sales on account will not be collected. Answer the following questions:
- (1) What is the Accounts Receivable balance at December 31, Year 1?
- (2) What is the ending balance of the Allowance for Doubtful Accounts at December 31, Year 1, after all entries and adjusting entries are posted?
- (3) What is the amount of uncollectible accounts expense for Year 1?
- (4) What is the net realizable value of accounts receivable at December 31, Year 1?
- Assume that Joeys Bike Shop uses the direct write-off method of accounting for uncollectible accounts. Answer the following questions:
- (1) What is the Accounts Receivable balance at December 31, Year 1?
- (2) What is the amount of uncollectible accounts expense for Year 1?
- (3) What is the net realizable value of accounts receivable at December 31, Year 1
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