a. Demron estimates that 2% of net credit sales will prove to be uncollectible. Prepare the...

a. Demron estimates that 2% of net credit sales will prove to be uncollectible. Prepare the adjusting entry required on December 31, 2017, to estimate uncollectible receivables.

b. During 2018, credit sales were $716,000 (cost of sales $469,460); sales discounts of $20,000 were taken when accounts receivable of $733,600 were collected; and accounts written off during the year totalled $16,400. Prepare the entries for these transactions. Assume Perpetual inventory system is used.

c. Record the adjusting entry required on December 31, 2018, to estimate uncollectible receivables, assuming it is based on 2% of net credit sales.

d. Show how accounts receivable would appear on the December 31, 2018, balance sheet.

Expert Solution

b
2018		Debit	Credit
1	Accounts receivable	716000
	Sales revenue		716000
2	Cost of goods sold	469460
	Inventory		469460
3	Cash	733600
	Sales discount and allowance	20000
	Accounts receivable		753600
4	Allowance for uncollectible accounts	16400
	Accounts receivable		16400

c	Adjusting entry 2018
	Bad debt expense	13920	(696000*2%)
	Allowance for uncollectible accounts		13920

	Net credit sales = Credit sales - sales dicount = 716000-20000= 696000

No informatio given for 2017 for part a and d

ekkarill92 answered 1 year ago

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