Working with Receivables
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If a company had sales of $180,000 during the month of October, which also included $120,000 in credit sales. October collections were $90,000.
Additional data:
September 30th we will debit balance in Accounts Receivable for $28,000.
September 30th we will credit balance in Allowance for Uncollectible Accounts, $1,000.
Uncollectible- Account expense, estimated as 2% of credit sales.
Write-offs of uncollectible receivables totaled $1,200
Need help with:
1) Preparing journal to record sales, collections, uncollectible -account expense by the allowance method (percent of sales method), and write -offs of uncollectibles during October.
2) Show the ending balance in Accounts Receivable, Allowance for Uncollectible Accounts, and net Accounts receivable at October 31st. Question how much would the company expect to collect
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Solution Summary
This solution is comprised of a detailed explanation to prepare journal to record sales, collections, uncollectible -account expense by the allowance method (percent of sales method), and write-offs of uncollectibles during October and show the ending balance in Accounts Receivable,Allowance for Uncollectible Accounts, and net Accounts receivable at October 31st.
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If a company had sales of $180,000 during the month of October, which also included $120,000 in credit sales. October collections were $90,000.
Additional data:
September 30th we will debit balance in Accounts Receivable for $28,000.
September 30th we will credit balance in Allowance for Uncollectible Accounts, $1,000.
Uncollectible- Account expense, estimated as 2% of credit sales.
Write-offs of uncollectible receivables totaled $1,200
Need help with:
1) Preparing journal to record sales, collections, uncollectible -account expense by the allowance method (percent of sales method), and write -offs of uncollectibles during October.
First, we will have to separate the amount between credit sales and cash sales. As the total sales in October is $180,000 and that the credit sales in October is $120,000, then the cash sales will be equaled to $180,000 - $120,000 = $60,000.
Therefore, journal entries for sales will be: -
Cash 60,000
Accounts Receivable 120,000
Sales 180,000
If the ...
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