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The September 30 20X7 records of First Data Communications include these accounts: Accounts Receivable $230000 Allowance for Doubtful Accounts 8500 During the year First Data estimates do

The

September 30, 20X7, records of First Data Communications include these accounts:

Accounts Receivable

$230,000

Allowance for Doubtful Accounts

(8,500)

During the year, First Data estimates doubtful-account expense at 1% of credit sales. At year end, the company ages its receivables and adjusts the balance in Allowance for Doubtful Accounts to correspond to the aging schedule. During the last quarter of 20X7, the company completed the following selected transactions:

20X7

 

Nov. 30

Wrote off as uncollectible the $1,100 account receivable from Rainbow Carpets and the $600 account receivable from Show-N-Tell Antiques.

Dec. 31

Adjusted the Allowance for Doubtful Accounts and recorded Doubtful-Account Expense at year end, based on the aging of receivables, which follows.

 

 

Age of Accounts

     

Total Balance

1–30 Days

31–60 Days

61–90 days

Over 90 Days

$230,000

$150,000

$40,000

$14,000

$26,000

Estimated uncollectible

0.2%

0.5%

5.0%

30.0%

Required

1. Record the transactions in the journal. Explanations are not required.

2. Prepare a T-account for Allowance for Doubtful Accounts and post to that account.

3. Show how First Data will report its accounts receivable on a comparative balance sheet for 20X7 and 20X6. At December 31, 20X6, the company’s Accounts Receivable balance was $212,000 and the Allowance for Doubtful

Accounts stood at $4,200.

Jun 18 2020 View more View Less

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