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Financial & Managerial Accounting
Found in: Page 350
Financial & Managerial Accounting

Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

Short Answer

At December 31, 2017, Ingleton Company reports the following results for the year:

Cash sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,025,000

Credit sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,342,000

In addition, its unadjusted trial balance includes the following items:

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . $575,000 debit

Allowance for doubtful accounts . . . . . . . . . . . . . 7,500 credit

Required

2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1a.

Answer

The allowance for doubtful accounts of $983,950 will report under the current assets section of the balance sheet.

See the step by step solution

Step by Step Solution

Step-by-Step SolutionStep 1: Meaning of Cash Sales

When the goods are sold and the payment is received at the same time, then this sales process is known as cash sales.

Step 2: Indication of the amounts in balance sheet

Balance Sheet
AssetsAmount
Current assets
Accounts receivables$1,025,00
Less: Allowance for doubtful accounts41,050
$983,95

Step 3: Notes to accounts

Most popular questions for Business-studies Textbooks

The following selected transactions are from Ohlm Company.

2016

Dec. 16 Accepted a $10,800, 60-day, 8% note dated this day in granting Danny Todd a time extension on his past-due account receivable.

31 Made an adjusting entry to record the accrued interest on the Todd note.

2017

Feb. 14 Received Todd’s payment of principal and interest on the note dated December 16.

Mar. 2 Accepted a $6,100, 8%, 90-day note dated this day in granting a time extension on the past-due account receivable from Midnight Co.

17 Accepted a $2,400, 30-day, 7% note dated this day in granting Ava Privet a time extension on her past-due account receivable.

Apr. 16 Privet dishonored her note when presented for payment.

May 31 Midnight Co. refused to pay the note that was due to Ohlm Co. on May 31. Prepare the journal entry to charge the dishonored note plus accrued interest to Midnight Co.’s accounts receivable.

July 16 Received payment from Midnight Co. for the maturity value of its dishonored note plus interest for 46 days beyond maturity at 8%.

Aug. 7 Accepted a $7,450, 90-day, 10% note dated this day in granting a time extension on the past-due account receivable of Mulan Co.

Sep. 3 Accepted a $2,100, 60-day, 10% note dated this day in granting Noah Carson a time extension on his past-due account receivable.

Nov. 2 Received payment of principal plus interest from Carson for the September 3 note.

Nov. 5 Received payment of principal plus interest from Mulan for the August 7 note.

Dec. 1 Wrote off the Privet account against the Allowance for Doubtful Accounts.

Required

  1. Prepare journal entries to record these transactions and events. (Round amounts to the nearest dollar.)

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