Carla Vista Ltd. began operations in January 2023. On December 31, 2023, the end of its first year of operations, the balance in the company's Accounts Receivable account was $126,000. All of the company's sales are made on account, and during 2023, 80% of the total credit sales were collected, and no accounts were written off as uncollectible. Carla Vista's management grouped its receivable based on credit risk characteristics, including geographic location and the length of time the receivables have been outstanding, and estimated the expected rate of credit losses for each group. Based on this, management estimated that the expected total credit loss would be $12,600. During the following year, 2024, Carla Vista had sales totalling $943,000. It collected 75% of these sales, togethe with 95% of the outstanding receivables from 2023. During 2024, the company wrote off $20,800 of receivables from customers whose accounts were determined to be uncollectible. During the year, the company also recovered $2,900 from customers whose accounts had previously been written off. (Note that this amount was not included in the collection figures given above.) Managemen determined that the expected total credit losses would be $18,275. (a) Prepare the necessary journal entries for recording all of the preceding transactions in the accounting system of Carla Vista Ltd. for 2023 and 2024. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation 2023 2024 (To record credit sales) (To record cash collected from customers) (To recognize the credit losses) (To record credit sales) Debit Credit
Carla Vista Ltd. began operations in January 2023. On December 31, 2023, the end of its first year of operations, the balance in the company's Accounts Receivable account was $126,000. All of the company's sales are made on account, and during 2023, 80% of the total credit sales were collected, and no accounts were written off as uncollectible. Carla Vista's management grouped its receivable based on credit risk characteristics, including geographic location and the length of time the receivables have been outstanding, and estimated the expected rate of credit losses for each group. Based on this, management estimated that the expected total credit loss would be $12,600. During the following year, 2024, Carla Vista had sales totalling $943,000. It collected 75% of these sales, togethe with 95% of the outstanding receivables from 2023. During 2024, the company wrote off $20,800 of receivables from customers whose accounts were determined to be uncollectible. During the year, the company also recovered $2,900 from customers whose accounts had previously been written off. (Note that this amount was not included in the collection figures given above.) Managemen determined that the expected total credit losses would be $18,275. (a) Prepare the necessary journal entries for recording all of the preceding transactions in the accounting system of Carla Vista Ltd. for 2023 and 2024. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Account Titles and Explanation 2023 2024 (To record credit sales) (To record cash collected from customers) (To recognize the credit losses) (To record credit sales) Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Transcribed Image Text:(To record cash collected from customers)
(To write off accounts judged uncollectible)
(To reinstate an account that was previously
written off)
(To record subsequent collection of accounts
that were previously written off)
(To recognize the credit losses)
||||| |||
Transcribed Image Text:Carla Vista Ltd. began operations in January 2023. On December 31, 2023, the end of its first year of operations, the balance in the
company's Accounts Receivable account was $126,000. All of the company's sales are made on account, and during 2023, 80% of the
total credit sales were collected, and no accounts were written off as uncollectible. Carla Vista's management grouped its receivable
based on credit risk characteristics, including geographic location and the length of time the receivables have been outstanding, and
estimated the expected rate of credit losses for each group. Based on this, management estimated that the expected total credit loss
would be $12,600. During the following year, 2024, Carla Vista had sales totalling $943,000. It collected 75% of these sales, together
with 95% of the outstanding receivables from 2023. During 2024, the company wrote off $20,800 of receivables from customers
whose accounts were determined to be uncollectible. During the year, the company also recovered $2,900 from customers whose
accounts had previously been written off. (Note that this amount was not included in the collection figures given above.) Managemen
determined that the expected total credit losses would be $18,275.
(a)
Prepare the necessary journal entries for recording all of the preceding transactions in the accounting system of Carla Vista Ltd.
for 2023 and 2024. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is
required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
Date Account Titles and Explanation
2023
2024
(To record credit sales)
(To record cash collected from customers)
(To recognize the credit losses)
(To record credit sales)
Debit
Credit
|||||
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