Managerial Accounting
Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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reported the following information:
At the beginning of current year, Nostalgia Company
Accounts receivable
Allowance for doubtful accounts
1,500,000
60,000
The following summary transactions affecting accounts
receivable occurred during the current year:
Sales- all on account 2/10, 1/15, n /60
7,935,000
Cash received from customers
8,000,000
The cash received from customers included the following.
Customers paying within the
10-day discount period
4,410,000
Customers paying within the
15-day discount period
2,475,000
Recovery of accounts written off
15,000
Customers paying beyond the discount period
Accounts receivable written off as worthless
55,000
Credit memoranda for sales return
30,000
Required:
a. Prepare journal entries to record the transactions.
b. Prepare the adjustment for doubtful accounts if the entity
follows the percentage of accounts receivable
consistently.
c. Determine the net realizable value of accounts receivable
at year-end?
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Transcribed Image Text:reported the following information: At the beginning of current year, Nostalgia Company Accounts receivable Allowance for doubtful accounts 1,500,000 60,000 The following summary transactions affecting accounts receivable occurred during the current year: Sales- all on account 2/10, 1/15, n /60 7,935,000 Cash received from customers 8,000,000 The cash received from customers included the following. Customers paying within the 10-day discount period 4,410,000 Customers paying within the 15-day discount period 2,475,000 Recovery of accounts written off 15,000 Customers paying beyond the discount period Accounts receivable written off as worthless 55,000 Credit memoranda for sales return 30,000 Required: a. Prepare journal entries to record the transactions. b. Prepare the adjustment for doubtful accounts if the entity follows the percentage of accounts receivable consistently. c. Determine the net realizable value of accounts receivable at year-end?
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