Classic Auto Parts sells new and used auto parts. Although a majority of its sal
ID: 2379240 • Letter: C
Question
Classic Auto Parts sells new and used auto parts. Although a majority of its sales are cash sales, it makes a significant amount of credit sales. During 2012, its first year of operations, Classic Auto Parts experienced the following:
Sales on account$280,000 Cash sales 650,000 Collections of accounts receivable 265,000 Uncollectible accounts charged off during the year 1,200
Assume that Classic Auto Parts uses the allowance method of accounting for uncollectible accounts and estimates that 1 percent of its sales on account will not be collected. Answer the following questions:
What is the Accounts Receivable balance at December 31, 2012?
What is the ending balance of the Allowance for Doubtful Accounts at December 31, 2012, after all entries and adjusting entries are posted?
What is the amount of uncollectible accounts expense for 2012?
What is the net realizable value of accounts receivable at December 31, 2012?
Assume that Classic Auto Parts uses the allowance method of accounting for uncollectible accounts and estimates that 1 percent of its sales on account will not be collected. Answer the following questions:
Explanation / Answer
a Sales on account 280000.00 Less :collection from a/c recvble 265000.00 Less : Uncollectible accounts charged off 1200.00 Accounts receivable 13800.00 b Allowance for doubtful accounts 1%*13800 138.00 c Uncollectible accounts charged off 1200.00 Add :allowance 138.00 amount of uncollectible accounts expense for 2012 1338.00 d Accounts receivable 13800.00 Less : allowance 1338.00 net realizable value of accounts receivable 12462.00