Please answer all the questions. Lab 3 (Chapter S) Terlipiate File Edit View Ins
ID: 2582191 • Letter: P
Question
Please answer all the questions. Lab 3 (Chapter S) Terlipiate File Edit View Insert Format Data Tools Add-ons n ~ 100% : $ % 0.00 123.1 Calibri Help All changes saved in Drive 12B 13 Transactions for 2015 and 2016: Provide service to customers on account Receive cash from customers on account Estimated A/R that will not be received Provide service to customers on account Receive cash from customers for services $80,000 $65,000 May 12, 2015 10 August 19, 2015 17 December 31, 2015 18 April 4, 2016 $73,000 8,000 1June 22, 2016 Finds out a customer who owed $2,000 now cannot pay his Account Receivable. So Sparkle Spa will write off this account Receive cash from customers for services 20 $2,000 42,000 20% July 2, 2016 21 October 19, 2016 22December 31, 2016Estimated A/R that will not be received in Excel- tutorial: 25 Example: I want to multiply the first cell below (100,000) by the second cell below (30%). First Cell Second Cell 30% First Cell times Second Cell 100,000 30,000 21. To do this, I click on cell F27 and hit : 302. Then I click on the first cell B27 3. Then I hit CTRL and the number 8 (an asterisk sign should appear ) START HERE Lab 3Lab 3 T
Explanation / Answer
Total Accounts receivable : $36,000
Less: Allownce for uncollectible accounts : $ 7,200
Net realisable value :$28,200
1. We create an allowance for uncolleclible accounts to enable us to provide for any bad debt which may arise due to customers not paying the amount due to the company. As the company cannot predict exact amounts which will not be collected, the uncollectible amounts are estimated on the basis of past experience of the business.
2. If there is a credit balance in the allowance for uncollectible accounts at the end of the year before any adjustment, this shows that the estimate of the doubtful accounts made during the last year were high and there is a need to correct the same during the current year.
Sparkle Spa Corporation 2015 Journal entries Date Account title Debit Credit May.12, 2015 Accounts Receivable 80000 Service revenue 80000 (To record service provided to customers) Aug.19,2015 Cash 65000 Accounts Receivable 65000 (To record cash received from customers) Dec.31,2015 Bad debts 3000 Allowance for doubtful accounts 3000 (To record allowance for doubtful accounts @20% of accounts receivable) Sparkle Spa Corporation 2016 Journal entries Date Account title Debit Credit April 4, 2016 Accounts Receivable 73000 Service revenue 73000 (To record service provided to customers) June22, 2016 Cash 8000 Accounts Receivable 8000 (To record cash received from customers) July2, 2016 Allowance for doubtful accounts 2000 Accounts Receivable 2000 (To record write off of not collectible account) Oct.19, 2016 Cash 42000 Accounts Receivable 42000 (To record cash received from customers) Dec.31, 2016 Bad debts 6200 Allowance for doubtful accounts 6200 (To record allowance for doubtful accounts @20% of accounts receivable) Accounts receivable Balance as on Dec.31, 2015 15000 Additions duringthe year 73000 Collections during the year (8,000 + 42,000) -50000 Written off during the year -2000 Balance as at Dec.31, 2016 36000 Allowance for doubtful accounts @20% 7200 Balance available in allowance account -1000 New allowance to be credited 6200