Problem 1:
The December 31, 2009 balance sheet of Quayle Company had Accounts Receivable of $500,000 and a credit balance in Allowance for Uncollectible Accounts of $33,000. During 2010, the following transactions occurred: sales on account $1,400,000; sales returns and allowances, $50,000; collections from customers, $1,150,000; accounts written off $35,000; previously written off accounts of $5,000 were collected.
Required to do:
a. Journalize the 2010 transactions. Please leave a blank line between each journal entry.
b. If the company uses the percentage of sales basis to estimate bad debts expense and anticipates 2% of net sales to be uncollectible, what is the adjusting entry at December 31, 2010?
c. Using a T account determine the balance of accounts receivable and the allowance for uncollectible accounts at 12/31/10.
d. Determine Quayle's net realizable value of accounts receivable at 12/31/10.
e. Calculate the accounts receivable turnover and days to collect ratios for 2010.
Problem 2:
Kiley Company had a $700 credit balance in Allowance for Uncollectible Accounts at December 31, 2010, before the current year's provision for uncollectible accounts. An aging of the accounts receivable revealed the following:
Estimated Percentage
Uncollectible
Current Accounts $120,000 1%
1 - 30 days past due 12,000 3%
31 - 60 days past due 10,000 6%
61 - 90 days past due 5,000 12%
Over 90 days past due 8,000 30%
Total Accounts Receivable $155,000
Required to do:
Prepare the adjusting entry on December 31, 2010 to recognize bad debts expense.