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Problem 3 (14 points) At 31* December 2020, Universal Limited reported the following information on its balance sheet: Accounts receivable Less: Allowance for doubtful accounts
Problem 3 (14 points) At 31* December 2020, Universal Limited reported the following information on its balance sheet: Accounts receivable Less: Allowance for doubtful accounts $1,120,000 $80,000 During 2021, the company had the following transactions related to receivables: a) Sales on account b) Sales returns and allowances c) Collections of accounts receivable d) Write-offs of accounts receivable deemed uncollectible e) Recovery of bad debts previously written off as uncollectible $2,642,000 $95,000 $1,170,000 $40,000 $15,000 Required: (1) Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable (2 points each); (i) Prepare the journal entry to record bad debts expense for 2021, assuming that an aging of accounts receivable indicates that estimated bad debts are $72,000 (2 points); and (iii) Compute the accounts receivable turnover ratio for the year 2021 (2 points) Write down your answers on the answer sheet
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