Question

At December 31, 2013, Weiss Imports reported this information on its balance sheet.

Accounts receivable $600,000
Less: Allowance for doubtful accounts 37,000
During 2014, the company had the following transactions related to receivables.
1. Sales on account $2,500,000
2. Sales returns and allowances 50,000
3. Collections of accounts receivable 2,200,000
4. Write-offs of accounts receivable deemed uncollectible 41,000
5. Recovery of bad debts previously written off as uncollectible 15,000
To do;
1. Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)
2. Enter the January 1, 2014, 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)
3. Prepare the journal entry to record bad debt expense for 2014, 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.)
4. Compute the accounts receivable turnover. (Round answer to 1 decimal place, e.g. 12.5.)
Accounts receivable turnover
Image for At December 31, 2013, Weiss Imports reported this information on its balance sheet. During 2014, the company
times
Compute the average collection period. (Round answer to 1 decimal place, e.g. 12.5.)
Average collection period
Image for At December 31, 2013, Weiss Imports reported this information on its balance sheet. During 2014, the company
days

Answer 1

account receivables 2,500,000 debit

sales revenue 2,500,000 credit

--to record sales on account--

sales returns and allowances 50,000 debit

account receivables 50,000 credit

--to record return and allowances--

cash 2,200,000 debit

account receivables 2,200,000 credit

--to record collections--

Allowance for doubtful accounts 41,000 debit

Account receivables 41,000 credit

--to record write-off of receivables--

Account receivables 15,000 credit

Allowance for doubtful accounts 15,000 debit

cash 15,000 debit

account receivables 15,000 credit

--to record recovery of write-off account--

Balance:

Account Receivalbes 809,000

Allowance (before adjustment) 11,000

adjusting entry:

bad debt expense 35,000 debit

Allowance for doubtful accounts 35,000 credit

Allowance after adjustment: 46,000

Account receivables TO: 3.75

Step-by-step explanation:

Account Receivables:

DEBIT CREDIT

600,000

2,500,000

50,000

2,200,000

41,000

15,000

809,000

Allowance:

DEBIT CREDIT

37,000

41,000

15,000

11,000

Aging: 46,000

Adjustment 35,000

Acc Rec TO

`$$ net sales / net receivables \\\\(sales - returns) / (acc rec - allowance)`

beginning A/R 600,000 - 37,000 = 543,000

ending A/R 809,000 - 46,000 = 763,000

average: (763,000 + 543,000 ) / 2 = 653,000

(2,500,000 - 50,000) / 653,000 = 3,75191 = 3.75