Question

At December 31, 2021, Cullumber Imports reported this information on its balance sheet.

Accounts receivable		$565,700
Less: Allowance for doubtful accounts		38,000

During 2022, the company had the following transactions related to receivables.

1.		Sales on account		$2,560,000
2.		Sales returns and allowances		50,000
3.		Collections of accounts receivable		2,260,000
4.		Write-offs of accounts receivable deemed uncollectible		42,400
5.		Recovery of bad debts previously written off as uncollectible		16,000

a.) Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. (Omit cost of goods sold entries.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

b.)  Enter the January 1, 2022, balances in Accounts Receivable and Allowance for Doubtful Accounts, post the entries to the two accounts and determine the balances. (Post entries in the order of journal entries posted in the previous part)

c.) Prepare the journal entry to record bad debt expense for 2022, assuming that aging the accounts receivable indicates that estimated bad debts are $46,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

d.) Compute the accounts receivable turnover. (Round answer to 1 decimal place, e.g. 12.4.)

Compute the average collection period. (Round answer to 1 decimal place, e.g. 12.4. Use 365 days for calculation.)

Answer 1