ACCOUNTING II CHAPTER 9 RECEIVABLES Vaslor Corporation ACCOU

ACCOUNTING II CHAPTER 9 RECEIVABLES (Vaslor Corporation) ACCOUNTSRECEIVABLE-ALLOWANCE METHOD The Vaslor Corporation has a $4,300 credit balance in the Allowance for Uncollecti ble Accounts account before any adjusting journal entry has been made. Based on prior experience the credit department estimates that 1.6% of sales are uncollectible. Net sales for the year are $1,122,000. An aging analysis was al so prepared and the aging result was $20,000. Prepare the appropriate journal entry to record uncollectible accounts expense if the Percentage of Net Sales method is used. Prepare the appropriate journal entry to record uncollectible accounts expense if the Accounts Receivable Aging Method is used. Calculate the Allowance for Uncollectible Accounts ending balance if the Percentage of Net Sales Method was used. Calculate the Allowance for Uncollectible Accounts ending balance if the Accounts Receivable Aging Method was used.

Solution

Net sales method: 1) Bad debts expense (1122000*1.6%) $     17,952 Allowance for uncollectible accounts $   17,952 Aging method: 2) Bad debts expense (20000-4300) $     15,700 Allowance for uncollectible accounts $   15,700 Net sales method: 3) Ending balance in allowance for uncollectible accounts under percentage sales method = 4300+17952 = $     22,252 Aging method: 4) Ending balance in allowance for uncollectible accounts under percentage sales method = $     20,000