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Question
Submitted by neel on Tue, 2013-01-08 16:41
due on Sat, 2013-01-12 16:41
answered 1 time(s)
neel is willing to pay $15.00
neel bought 758 out of 1819 answered question(s)
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Tempe Company - Allowance method:...

Allowance method:

  1. Allowance method: Income statement and balance sheet

    approaches. 
    Tempe

    Company reported accounts receivable of $300,000 and an allow­ance for

    uncollectible accounts of $31,000 (credit) on the December 31, 19X2, balance

    sheet. The following data pertain to 19X3 activities and operations:

 

  

 

Sales

  on account



    

 

$2,000,000



    

 

Cash

  collections from credit customers



    

 

1,600,000



    

 

Sales

  discounts



    

 

50,000



    

 

Sales

  returns & allowances



    

 

100,000



    

 

Uncollectible

  accounts written off



    

 

29,000



    

 

Collections

  on accounts that were previously written off



    

 

2,700



 

 

 

Instructions

  1. Prepare journal entries to

    record the sales- and receivables-related trans­actions from 19X3.
  2. Prepare the December 31,

    19X3, adjusting entry for uncollectible ac­counts assuming that uncollectibles

    are estimated to be 2% of net credit sales.
  3. Prepare the December 31,

    19X3, adjusting entry for uncollectible ac­counts assuming that uncollectibles

    are estimated at 1% of year-end accounts receivable.
  4. Compute the amount of the

    adjusting entry in part (c) assuming that $46,000, rather than $29,000, of

    accounts were written off in 19X3.