Tull Bros. uses the allowance method to account for uncollectible accounts expense. Tull experienced the following four
Question:
Tull Bros. uses the allowance method to account for uncollectible accounts expense. Tull experienced the following four events in 2016:
1. Recognized $68,000 of revenue on account.
2. Collected $62,000 cash from accounts receivable.
3. Determined that $500 of accounts receivable were not collectible and wrote them off.
4. Recognized uncollectible accounts expense for the year. Tull estimates that uncollectible accounts expense will be 2 percent of its sales.
Required
a. Show the effect of each of these events on the elements of the financial statements, using a horizontal statements model like the following one. Use + for increase, - for decrease, and NA for not affected. In the cash flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA).
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b. Record the above transactions in general journal form.
Accounts ReceivableAccounts 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...
Step by Step Answer:
a Event Assets Liab Equity Rev Exp Net Inc Cash Flows Cash A Rec Allow Ret Earn 1 NA NA NA NA ...View the full answer
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds
