In: Accounting
The following data were selected from the records of Sykes Company for the year ended December 31, Current Year. Balances January 1, Current Year Accounts receivable (various customers) $ 117,000 Allowance for doubtful accounts 6,000 In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 4/10, n/30 (assume a unit sales price of $700 in all transactions and use the gross method to record sales revenue). Transactions during Current Year
Sold merchandise for cash, $248,000.
Sold merchandise to R. Smith; invoice price, $11,500.
Sold merchandise to K. Miller; invoice price, $23,000.
Two days after purchase date, R. Smith returned one of the units purchased in (b) and received account credit.
Sold merchandise to B. Sears; invoice price, $26,000.
R. Smith paid his account in full within the discount period.
Collected $99,000 cash from customer sales on credit in prior year, all within the discount periods.
Miller paid the invoice in (c) within the discount period.
Sold merchandise to R. Roy; invoice price, $20,500.
Three days after paying the account in full, K. Miller returned seven defective units and received a cash refund.
After the discount period, collected $6,000 cash on an account receivable on sales in a prior year.
Wrote off a prior year account of $5,000 after deciding that the amount would never be collected.
The estimated bad debt rate used by the company was 1.0 percent of credit sales net of returns.