The Westlake Company uses the percent of sales method of accounting for uncollectible accounts receivable. At the beginning of the current year, the Allowance for Doubtful Accounts had normal balance of $6,000. The following transactions took place during the current year: Oct 11 Dec. 31 Westlake Company determined that the $8,700 account receivable of the ITC Company was uncollectible and wrote it off. Westlake Company estimates that 1.5% of its $1,850,000 of credit sales would be uncollectible. The Accounts Receivable Account had a balance of $1,200,000 Required: Part a. Prepare journal entries needed to account for the above information. Part b. Determine the balance of the Allowance for Doubtful Accounts at the end of the current year. Assume that the transactions above are the only transactions affecting this account during the year. Part c. Illustrate the impact (or explain the impact including location) on the Income Statement and the Balance Sheet of the above information.
The Westlake Company uses the percent of sales method of accounting for uncollectible accounts receivable. At the beginning of the current year, the Allowance for Doubtful Accounts had normal balance of $6,000. The following transactions took place during the current year: Oct 11 Dec. 31 Westlake Company determined that the $8,700 account receivable of the ITC Company was uncollectible and wrote it off. Westlake Company estimates that 1.5% of its $1,850,000 of credit sales would be uncollectible. The Accounts Receivable Account had a balance of $1,200,000 Required: Part a. Prepare journal entries needed to account for the above information. Part b. Determine the balance of the Allowance for Doubtful Accounts at the end of the current year. Assume that the transactions above are the only transactions affecting this account during the year. Part c. Illustrate the impact (or explain the impact including location) on the Income Statement and the Balance Sheet of the above information.
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter16: Accounting For Accounts Receivable
Section: Chapter Questions
Problem 3CP: At the end of 20-3, Martel Co. had 410,000 in Accounts Receivable and a credit balance of 300 in...
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