Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Wilson Leather Products sells leather clothing at both wholesale and retail. The company has found that there is a higher rate of uncollectible accounts from

image text in transcribed
Wilson Leather Products sells leather clothing at both wholesale and retail. The company has found that there is a higher rate of uncollectible accounts from retail credit sales than from wholesale credit sales. Wilson computes its estimated loss from uncollectible accounts at the end of each year. The amount is based on the rates of loss that the firm has developed from experience for each division. A separate computation is made for each of the two types of sales. The firm uses the percentage of net credit sales method. Joints As of December 31, 2019, Accounts Receivable has a balance of $398,000, and Allowance for Doubtful Accounts has a debit balance of $386. The following table provides a breakdown of the credit sales for the year 2019 and the estimated rates of loss: BOOK Estimated Rate of LOSS Category Wholesale $2,100,000 579,000 Required: 1. Compute the estimated amount of uncollectible accounts expense for each of the two categories of net credit sales for the year 2. Prepare an adjusting entry in general Journal form to provide for the estimated uncollectible accounts on December 31, 2019. Use Uncollectible Accounts Expense. 3. Show how Accounts Receivable and Allowance for Doubtful Accounts should appear on the balance sheet of Wilson Leather Products as of December 31, 2019 4. On January 20, 2020, the account receivable of Columbus Clothiers, amounting to $890, is determined to be uncollectible and is to be written off. Record this transaction in the general journal 5. On November 26, 2020, the attorneys for Wilson turned over a check for $890 that they obtained from Columbus Clothiers in settlement of its account, which had been written off on January 20. The money has already been recorded in the cash receipts journal. Give the general journal entry to reverse the original write-off. Analyze: Compute the net accounts receivable amount that should be reported in the financial statements for the year ended December 31 2019

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Construction accounting and financial management

Authors: Steven j. Peterson

2nd Edition

135017114, 978-0135017111

More Books

Students also viewed these Accounting questions

Question

What risks come with the reliance on authority for knowledge?

Answered: 1 week ago

Question

clarify and articulate your research methodology;

Answered: 1 week ago

Question

consider how to build on prior learning.

Answered: 1 week ago