Respuesta :
Answer:
Explanation:
a. The journal entries are presented below:
1. Account receivable A/c Dr $3,700,000
To Sales revenue $3,700,000
(Being the goods are sold on credit)
2. Sales return and allowance A/c Dr $50,000
To Accounts receivable $50,000
(Being sales return is recorded)
3. Cash A/c Dr $2,810,000
To Accounts receivable $2,810,000
(Being cash is received)
4. Allowance for Doubtful Accounts A/c Dr $90,000
To Account receivable A/c $90,000
(Being written off amount is recorded)
5. Accounts Receivable Dr A/c Dr $29,000
To Allowance for Doubtful Accounts A/c $29,000
(Being uncollected amount is recorded)
Cash A/c Dr $29,000
To Accounts Receivable A/c Dr $29,000
(Being recovery of bad debt is recorded)
b. The T-Accounts are shown below:
Account receivable
Opening balance $960,000 Sales returns $50,000
Sales $3,700,000 Collection $28,10,000
Uncollectible $29,000 Written off $90,000
Collection $29,000
Ending balance $17,10,0000
Allowance for Doubtful Debts
Written off $90,000 Beginning balance $80,000
UnCollectible $29,00
Ending balance $19,000
c. Bad debt expense A/c Dr $96,000 ($115,000 - $19,000)
To Allowance for doubtful debts $96,000
(Being bad debt expense is recorded)
d. The computation of the accounts receivable turnover ratio is given below:
Account receivable turnover ratio = Net credit sales ÷ Average accounts receivable
where,
Net credit sales is $960,000 $3,700,000
And, the Average accounts receivable would be
= (Accounts receivable, beginning of year + Accounts receivable, end of year) ÷ 2
= ( $880,000 + $1,595,000) ÷ 2
= $1,237,500
The Accounts receivable, beginning of year would be
= $960,000 - $80,000
= $880,000
The Accounts receivable, ending of year would be
= $1,710,000 - $115000
= $1,595,000
So, the accounts receivable turnover ratio would be
= $3,700,000 ÷ $1,237,500
= 2.99 times
a. The Journal Entries to record the five transactions in the books of House Co. are as follows:
Journal Entries:
1. Debit Accounts Receivable $3,700,000
Credit Sales Revenue $3,700,000
2. Debit Sales returns and allowances $50,000
Credit Accounts Receivable $50,000
3. Debit Cash $2,810,000
Credit Accounts Receivable $2,810,000
4. Debit Allowance for Doubtful Accounts $90,000
Credit Accounts Receivable $90,000
5. Debit Accounts Receivable $29,000
Credit Allowance for Doubtful Accounts $29,000
Debit Cash $29,000
Credit Accounts Receivable $29,000
b) T-accounts:
Accounts receivable
Description Debit Credit
Beginning balance $960,000
1. Sales Revenue 3,700,000
2. Sales returns and allowances $50,000
3. Cash 2,810,000
4. Allowance for Doubtful Accounts 90,000
5. Accounts Receivable 29,000
Cash 29,000
Ending balance $1,710,000
Allowance for doubtful accounts
Description Debit Credit
Beginning balance $80,000
4. Accounts Receivable $90,000
5. Accounts Receivable 29,000
Bad Debts Expenses 96,000
Ending balance $115,000
c. The journal entry to record the bad debt expense for the year, using the expected bad debts of $115,000 and Bad Debts expenses of $96,000 is as follows:
Adjusting Journal Entry:
Debit Bad Debt Expense $96,000
Credit Allowance for Doubtful Accounts $96,000
d. Accounts Receivable Turnover for 2017 is 2.95 times.
Accounts receivable turnover = Net Sales/Average Receivables
= $3,650,000/$1,237,500
= 2.95 times
Data Analysis:
Beginning balances:
Accounts receivable = $960,000
Allowance for doubtful accounts = $80,000
1. Accounts Receivable $3,700,000 Sales Revenue $3,700,000
2. Sales returns and allowances $50,000 Accounts Receivable $50,000
3. Cash $2,810,000 Accounts Receivable $2,810,000
4. Allowance for Doubtful Accounts $90,000 Accounts Receivable $90,000
5. Accounts Receivable $29,000 Allowance for Doubtful Accounts $29,000
Cash $29,000 Accounts Receivable $29,000
Adjustments:
Bad Debt Expense $96,000 Allowance for Doubtful Accounts $96,000
Accounts receivable turnover = Net Sales/Average Receivables
= $3,650,000/$1,237,500
= 2.95 times
Average Receivables = $1,237,500 ($880,000 + $1,595,000)/2
Net Sales for 2017 = $3,650,000 ($3,700,000 - $50,000)
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