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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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
Transcribed Image Text:Liang Company began operations in Year 1. During its first two years, the company completed a number of transactions involving sales
on credit, accounts receivable collections, and bad debts. These transactions are summarized as follows.
Year 1
a. Sold $1,346,600 of merchandise on credit (that had cost $979,500), terms n/30.
b. Wrote off $18,800 of uncollectible accounts receivable.
c. Received $669,400 cash in payment of accounts receivable.
d. In adjusting the accounts on December 31, the company estimated that 3.00% of accounts receivable would be uncollectible.
Year 2
e. Sold $1,579,500 of merchandise (that had cost $1,326,000) on credit, terms n/30.
f. Wrote off $31,400 of uncollectible accounts receivable.
g. Received $1,251,500 cash in payment of accounts receivable.
h. In adjusting the accounts on December 31, the company estimated that 3.00% of accounts receivable would be uncollectible.
Required:
Prepare journal entries to record Liang's Year 1 and Year 2 summarized transactions and its year-end adjustments to record bad debts
expense. (The company uses the perpetual inventory system, and it applies the allowance method for its accounts receivable.)
Note: Round your intermediate calculations to the nearest dollar.
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- Haresharrow_forwardIn its first year of operations, Cloudbox has credit sales of $200,000. Its year-end balance in accounts receivable is $10,000, and the company estimates that $1,500 of its accounts receivable is uncollectible.a. Prepare the year-end adjusting entry to estimate bad debts expense.b. Prepare the current assets section of Cloudbox’s classified balance sheet assuming Inventory is $22,000, Cash is $14,000, and Prepaid Rent is $3,000. Note: The company reports Accounts receivable, net on the balance sheet.arrow_forwardQuestion: Presented below is the information for Skysong Company. Beginning of the year Accounts Receivable balance was $23600. Net sales (all on account) for the year were $103100. Skysong does not offer cash discounts. Collections on accounts receivable during the year were $90300. Skysong is planning to factor some accounts receivables at the end of the year. Accounts totaling $14100 will be transfered to Credit Factors, Inc with recourse. Credit Factor will retain 7% of the balances for probable adjustments and assesses a finance charge of 6%. The fair value of the recourse obligation is $1021. Prepare the journal entry to record the sale of the receivables. Compute Skysongs accounts receivable turnover for the year, assuming the receivables are sold.arrow_forward
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