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QUESTION 2 On January 1, 2021, Hilly Mountain Flagpoles had Accounts Receivable debit balance of $31,000, and Allowance for Bad Debts had a credit balance
QUESTION 2 On January 1, 2021, Hilly Mountain Flagpoles had Accounts Receivable debit balance of $31,000, and Allowance for Bad Debts had a credit balance of $3,000. During the year 2021, Hilly Mountain Flagpoles recorded the following: Sales of $174,000 ($157,000 on account: $17,000 for cash). Ignore Cost of Goods Sold. Collections on account, $131,000. Write-offs of uncollectible receivables, $2,200. (a) Journalize Hilly's transactions that occurred during year ended 31 December 2021. The company uses the allowance method. (7 marks) (b) Post Hilly's transactions during the year ended 31 December 2021 to the Accounts Receivable and Allowance for Bad Debts T-accounts (8 Marks) c) (i) Journalize Hilly's adjustment to record bad debts expense assuming Hilly estimates bad debts as 3% of accounts receivable. (4 marks) (ii)Post the adjustment to the Allowance for Bad Debts and Bad Debts Expense T- accounts. (8 marks) (d) Show how Hilly Mountain Flagpoles will report net accounts receivable on its Balance Sheet as at December 31, 2021
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