The following transactions affecting the accounts receivable of Wonderland Corporation took place during the year ended January

Question:

The following transactions affecting the accounts receivable of Wonderland Corporation took place during the year ended January 31, 2013:

Sales (cash and credit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....$691,050

Cash received from credit customers, all of whom took advantage of the

discount feature of the corporation's credit terms 4/10, n/30 . . . . . . . . . . . . . ... . . . 303,800

Cash received from cash customers. . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . 310,270

Accounts receivable written off as worthless. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,250

Credit memoranda issued to credit customers for sales

returns and allowances. . . . . .................................................... . . . . . . . . . 83,800

Cash refunds given to cash customers for sales returns and allowances . .. . . . . . . . . . 13,318

Recoveries on accounts receivable written off as uncollectible in prior periods

(not included in cash amount stated above) . . . . . . . . . . . . . . . . . . . . .......... . . . . . . . . 8,290

The following two balances were taken from the January 31, 2012, balance sheet:

Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $95,842

Allowance for Bad Debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,740 (credit)

The corporation provides for its net uncollectible account losses by crediting Allowance for Bad Debts for 1.5% of net credit sales for the fiscal period.

Instructions:

1. Prepare the journal entries to record the transactions for the year ended January 31, 2013.

2. Prepare the adjusting journal entry for estimated uncollectible accounts on January 31, 2013.

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-0538479738

18th edition

Authors: Earl K. Stice, James D. Stice

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