1. Determining account balance: percent of revenue allowance method of accounting for uncollectible accounts
The following information pertains to Leslie's Floor Store sales on account and accounts receivable
Accounts receivable balance, January 1, 2012: $52,500
Allowance for doubtful accounts, January 1, 2012: 4,725
Sales on account, 2012: 925,000
Cost of goods sold, 2012: 615,000
Collections of accounts receivable, 2012: 835,000
After several collection attempts, Leslie's wrote off $3,100 of accounts that could not be collected. Leslie estimates that bad debts expense will be 0.5 percent of sales on account.
A. Compute the following amounts. 1.) using the allowance method, the amount of uncollectable accounts expense for 2012.
2.) Net realizable value of receivables at the end of 2012.
B. Explain why the uncollectable accounts expense amount is different from the amount that was written off as uncollectible.
2. O' Brian service Company purchased a copier on January 1, 2012 for 17,000 and paid an additional $200 for delivery chargers. The copier was estimated to have a life of four years or 800,000 copies. Salvages was estimated at $1200. The copier produced 230,000 copies in 2012 and 250,000 copies in 2013.
Compute the amount of depreciation expense for the copier for calendar years 2012 and 2013 using these methods:
a. Straight line
b. Units- of -production
c. Double- declining balance
Solution discusses the percent of revenue allowance method of accounting for uncollectible accounts