The Tanner Company provided the following information for 2015, after year-end adjustments. Allowance for doubtful accounts...

The Tanner Company provided the following information for 2015, after year-end adjustments.

Allowance for doubtful accounts was $11,000 at the beginning of the year, and $30,000 at the end of the year.
Accounts receivable (gross) were $80,000 at the beginning of the year, and $420,000 at the end of the year.
Accounts written off as uncollectible during the year were $10,000.
Sales totaled $2,700,000. Half of the sales were in cash; half were on credit. Like all temporary income statement accounts, the beginning balance was $0.
Sales discounts were $100,000 and applied equally to cash and credit sales.

(a) How much was Tanner's net sales revenue for the year?

(b) Complete the T-accounts for Sales Revenue, Allowance for Doubtful Accounts and Accounts Receivable (gross) for the year. Don’t forget to fill in the parentheses and use + and – to indicate the side of the T that represents increases and decreases. Label what is increasing and decreasing in each T-account. For example, net credit sales of $1,300,000 will increase the accounts receivable T-account.

(d) What is the journal entry to write off uncollectible accounts?

Solutions

Expert Solution

(a) Net Sales Revenue = Total Sales - Sales Discount

=$2700000 - $100000 = $2600000

(b)

(c) Journal Entry for estimated Bad Debts

Profit & Loss Account Dr. $29000 (Refer ledger)

To Allowance for Doubtful Accounts $29000

(d) Journal entry to write off uncollectible accounts

Bad Debt Expenses Account Dr.$10000

To Account Receivable Account $10000

ekkarill92 answered 1 year ago

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