Problem 8-2A At December 31, 2016, Novak Corp. Imports reported this information
ID: 2564753 • Letter: P
Question
Problem 8-2A At December 31, 2016, Novak Corp. Imports reported this information on its balance sheet. Accounts receivable Less: Allowance for doubtful accounts $564,800 35,700 During 2017, the company had the following transactions related to receivables 1. Sales on account 2. Sales returns and allowances . Collections of accounts receivable 4. Write-offs of accounts receivable deemed uncollectible 5. Recovery of bad debts previously written off as uncollectible $2,896,800 91,648 2,637,500 43,840 13,830 Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. (Omit cost of goods sold entries.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit 2Explanation / Answer
No Account titles & Explanations Debit Credit 1 Accounts receivable 2,896,800 Sales 2,896,800 2 Sales return & allowance 91,648 Accounts receivable 91,648 3 Cash 2,637,500 Accounts receivable 2,637,500 4 Allowance for Doubtful accounts 43,840 Accounts receivable 43,840 5 Accounts receivable 13,830 Allowance for Doubtful accounts 13,830 cash 13,830 Accounts receivable 13,830 Accounts receivable BB 564,800 2 91,648 1 2,896,800 3 2,637,500 5 13,830 4 43,840 5 13,830 End bal 688612 Allowance for Doubtful accounts 4 43,840 BB 35,700 5 13,830 End bal 5,690 Account titles & Explanations Debit Credit Bad debts expense 67062 Allowance for Doubtful accounts 67,062 (72,752-5,690) Accounts receivable turnover = net sales/average account receivable net sales = 2,896,800-91,648= 2,805,152 Average accounts receivable (564800+688612)/2= 626706 Account receivable turnover 2,805,152/626,706 4.5 times Average collection period = 365/account receivable turnover 81.5 Days