Exercise 7-8A (Algo) Accounting for uncollectible accounts: percent of receivables allowance method LO 7-2, 7-3 Vulcan Service Company experienced the following transactions for Year 1, its first year of operations: 1. Provided $70,000 of services on account. 2. Collected $42,000 cash from accounts receivable. 3. Paid $28,000 of salaries expense for the year. 4. Adjusted the accounts using the following information from an accounts receivable aging schedule: Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance Current $20,720 0.01 0 to 30 1,400 0.05 31 to 60 1,960 61 to 90 1,680 Over 90 days 2,240 0.10 0.30 0.50 Required 1. Record the given transactions in general journal form and post to T-accounts. 2. Prepare the income statement for Vulcan Service Company for Year 1. 3. What is the net realizable value of the accounts receivable at December 31, Year 1?
Exercise 7-8A (Algo) Accounting for uncollectible accounts: percent of receivables allowance method LO 7-2, 7-3 Vulcan Service Company experienced the following transactions for Year 1, its first year of operations: 1. Provided $70,000 of services on account. 2. Collected $42,000 cash from accounts receivable. 3. Paid $28,000 of salaries expense for the year. 4. Adjusted the accounts using the following information from an accounts receivable aging schedule: Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance Current $20,720 0.01 0 to 30 1,400 0.05 31 to 60 1,960 61 to 90 1,680 Over 90 days 2,240 0.10 0.30 0.50 Required 1. Record the given transactions in general journal form and post to T-accounts. 2. Prepare the income statement for Vulcan Service Company for Year 1. 3. What is the net realizable value of the accounts receivable at December 31, Year 1?
Financial & Managerial Accounting
14th Edition
ISBN:9781337119207
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter8: Receivables
Section: Chapter Questions
Problem 8.14EX: Entries for bad debt expense under the direct write-off and allowance methods The following selected...
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Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Transcribed Image Text:Exercise 7-8A (Algo) Accounting for uncollectible accounts: percent of
receivables allowance method LO 7-2, 7-3
Vulcan Service Company experienced the following transactions for Year 1, its first year of operations:
1. Provided $70,000 of services on account.
2. Collected $42,000 cash from accounts receivable.
3. Paid $28,000 of salaries expense for the year.
4. Adjusted the accounts using the following information from an accounts receivable aging schedule:
Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance
Current
$20,720 0.01
0 to 30
1,400
31 to 60
1,960 0.10
61 to 90
1,680
0.30
Over 90 days
2,240
0.05
0.50
Required
1. Record the given transactions in general journal form and post to T-accounts.
2. Prepare the income statement for Vulcan Service Company for Year 1.
3. What is the net realizable value of the accounts receivable at December 31, Year 1?
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