FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Maraton Inc. imports gourmet coffee and sells it to local restaurants. All sales are made on account with terms net 30. Maraton Inc. uses the perpetual inventory method and the first-in first out costing method. At the beginning of the year, Maraton Inc. had the following account balances
Accounts receivable balance of $3,000 and an allowance for doubtful accounts of $800. All the amounts were owed from A Ltd.- Opening inventory of 100 units at $50 per unit.
The company had the following transactions during the fiscal year ended December 31, 2023:
|
Date |
Transaction |
|
Feb. 15 |
Purchase 400 units at $55 per unit for cash. |
|
Mar 15 |
Received $2,500 from A Ltd. Wrote off the remaining balance as uncollectible. |
|
May 1 |
Sold 300 units to B Ltd. on account at $110 per unit |
|
May 30 |
B Ltd. paid the balance owed from the May 1 sale. |
|
Aug 1 |
Purchased 300 units at $70 per unit on credit. |
|
Sep 25
|
Sold 300 units to C Ltd. on account at $120 per unit. |
|
Nov 15 |
Purchased 200 units at $65 per unit on credit.
|
|
Dec 4 |
Sold 300 units to D Ltd. on account at $125per unit. |
At the end of the year Maraton Inc. uses the aging method of estimating its uncollectible accounts. Maraton Inc. estimates that the amount that will not be collectible is 20% if the receivable is overdue more than 60 days, 10% if overdue equal to or less than 60 days and 2% if not yet due.
Required
- Prepare all necessary entries to record the transactions above and to record the appropriate allowance for doubtful accounts at year end. Show your calculations. Round any intermediate values to 4 decimal places. Round final
journal entry amounts to two decimal places. - Calculate the accounts receivable turnover ratio for the year ended December 31, 2023.
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