Use the following information to answer Exercises E8-18 and E8-19. January 1, 2018, Hilltop Flagpoles had Accounts Receivable of $28,000, and Allowance for Bad Debts had a credit balance of $3,000. During the year, Hilltop Flagpoles recorded the following; Sales of $185,000 ($164,000 on account; $21,000 for cash). Ignore Cost of Goods Sold. Collections on account, $135,000. Write-offs of uncollectible receivables, $2,30p. Accounting for uncollectible accounts using the allowance method (percent-of-receivables) and reporting receivables on the balance sheet Requirements Journalize Hilltop’s transactions that occurred during 2018. The company uses the allowance method. Post Hilltop’s transactions to the Accounts Receivable and Allowance for Bad Debts T-accounts. Journalize Hilltop’s adjustment to record bad debts expense assuming Hilltop estimates bad debts as 10% of accounts receivable. Post the adjustment to the appropriate T-accounts. Show how Hilltop Flagpoles will report net accounts receivable on its December 31, 2018, balance sheet.
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.
Use the following information to answer Exercises E8-18 and E8-19.
January 1, 2018, Hilltop Flagpoles had
- Sales of $185,000 ($164,000 on account; $21,000 for cash). Ignore Cost of Goods Sold.
- Collections on account, $135,000.
- Write-offs of uncollectible receivables, $2,30p.
Accounting for uncollectible accounts using the allowance method (percent-of-receivables) and reporting receivables on the
Requirements
- Journalize Hilltop’s transactions that occurred during 2018. The company uses the allowance method.
Post Hilltop’s transactions to the Accounts Receivable and Allowance for Bad Debts T-accounts.- Journalize Hilltop’s adjustment to record bad debts expense assuming Hilltop estimates bad debts as 10% of accounts receivable. Post the adjustment to the appropriate T-accounts.
- Show how Hilltop Flagpoles will report net accounts receivable on its December 31, 2018, balance sheet.
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