The following financial information pertains to SPACE Limited: Accounts receivable at December 31, 2018 $ 900,000 Credit sales for 2019 6,800,000 Cash collection on credit sales during 2019 6,540,000 Allowance for Impairment at December 31, 2018 45,000 Accounts receivable written off on August 31, 2019 60,000 Previously written off accounts receivable was received on September 25, 2019 10,000 An aging analysis estimates uncollectible receivables at December 31, 2019 to be $80,000. Required: (Explanation for each journal entry is NOT required) a. Prepare the journal entry for the accounts receivable written off during 2019. b. Prepare the journal entry for the event occurring on September 25, 2019 c. Prepare the year-end adjusting entry required to record the impairment loss of receivable. Assume the statement of financial position approach is used. d. Explain how the transaction in (c) affects the accounting equation. e. What is the net realizable value of accounts receivable to be shown in the statement of financial position as at December 31, 2019. Show your calculations.

The following financial information pertains to SPACE Limited: Accounts receivable at December 31, 2018 $ 900,000 Credit sales for 2019 6,800,000 Cash collection on credit sales during 2019 6,540,000 Allowance for Impairment at December 31, 2018 45,000 Accounts receivable written off on August 31, 2019 60,000 Previously written off accounts receivable was received on September 25, 2019 10,000 An aging analysis estimates uncollectible receivables at December 31, 2019 to be $80,000. Required: (Explanation for each journal entry is NOT required) a. Prepare the journal entry for the accounts receivable written off during 2019. b. Prepare the journal entry for the event occurring on September 25, 2019 c. Prepare the year-end adjusting entry required to record the impairment loss of receivable. Assume the statement of financial position approach is used. d. Explain how the transaction in (c) affects the accounting equation. e. What is the net realizable value of accounts receivable to be shown in the statement of financial position as at December 31, 2019. Show your calculations.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 15P: Comprehensive Receivables Problem Blackmon Corporations December 31, 2018, balance sheet disclosed...

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