Part 1: Percentage of uncollectible accounts per year = Uncollectible accounts x
ID: 2350475 • Letter: P
Question
Part 1:
Percentage of uncollectible accounts per year = Uncollectible accounts x 100 divided by Net Sales
Year one:
Year two:
Year three:
Year four:
Part 2:
Name of the Companies
Sales
Sales Discount
Sales Returns and allowances
Net Sales
Percentage of Net Sales Uncollectible
Amount of Uncollectible Accounts Payable
Andrews Co
$142,360
$1,423
$936
$140,001
2
The Book Nook
$209,100
$3,180
$1,139
$204,781
1
Cable Inc
$173,270
$1,730
$1,540
$170,000
1 ?
Davis Inc
$65,460
$650
$690
64,120
2
Ever ? Sharp Co
$95,085
$900
$1,035
93,150
1 ?
Net Sales = Sales minus sales Discounts, Sales Returns and allowances
Adjusting entry for the estimated uncollectible accounts expense for Davis Inc.
General Journal
DATE
DESCRIPTION
POST REF
DEBIT
CREDIT
Name of the Companies
Sales
Sales Discount
Sales Returns and allowances
Net Sales
Percentage of Net Sales Uncollectible
Amount of Uncollectible Accounts Payable
Andrews Co
$142,360
$1,423
$936
$140,001
2
The Book Nook
$209,100
$3,180
$1,139
$204,781
1
Cable Inc
$173,270
$1,730
$1,540
$170,000
1 ?
Davis Inc
$65,460
$650
$690
64,120
2
Ever ? Sharp Co
$95,085
$900
$1,035
93,150
1 ?
Explanation / Answer
When a business operates by making sales on credit, it faces the risk that it will not be able to collect on some of the obligations. While it is easy to identify an uncollectible receivable as a recorded sale for which you will be unable to recover the proceeds, there are several steps a business needs to take to get to that point. These issues include determining when to recognize a sale for income purposes, when to write-off the possibility of collecting a sale and to what degree the business needs to allow for future uncollectible accounts. Two primary methods exist for companies to recognize uncollectible accounts--the direct write-off method and the allowance method. Business owners must understand the pros and cons of each method to choose the one most beneficial to their business. What else you want exactly. Tell me