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.
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