The balance sheet of Libra, Inc., a world leader in the design and sale of telescopic equipment, reported the following information on its balance sheets for 2016 and 2015 (figures are in thousands):

In 2016, Libra recorded $13,200 (gross) in sales (all on account), of which $1,200 (gross) was returned for credit. The cost of sales was $7,260; the cost of the merchandise returned was $660. Libra offers its customers credit terms of 2/10, n/30. Sixty percent of collections on accounts receivable were made within the discount period. Libra wrote off uncollectible accounts receivable in the amount of $200 (net) during 2016. Sales returns are estimated to be 5% of sales.
Requirements
1. Compute the amount of uncollectible accounts expense recorded by Libra in 2016.
2. Compute Libra's cash collections from customers in 2016.
3. Open T-accounts for Accounts Receivable and Allowance for Uncollectible Accounts. Enter the beginning balances into each of these accounts. Prepare summary journal entries in the T-accounts to record the following for 2016:
a. Sales revenue
b. Cost of goods sold
c. Estimated refunds
d. Cost of estimated returns
e. Merchandise returned
f. Cost of merchandise returned
g. Collections including sales discounts forfeited
h. Write-offs of uncollectible accounts
i. Uncollectible-Accounts Expense

Transcribed Image Text:

December 31, 2016 December 31, 2015 (In thousands) Accounts receivable (net of allowance of $1,050 and $990, respectively) $8,650 $8,910