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Calculate the credit sales for the year 2015

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Reference no: EM131815780

Additional Hand-in Problem - Cartoons Inc.

The following information is provided regarding Cartoons Inc.'s accounts receivable and allowance for doubtful accounts:

Accounts Receivable, January 1, 2015   $1,200,000
Collections of Accounts Receivable during the year   $1,900,000
Write-offs of Accounts Receivable    $ 300,000
Accounts Receivable, December 31, 2015    $1,850,000
Allowance for Doubtful Accounts (December 31, 2015 balance (before bad debts adjusting entry)  $ 155,000(debit)

Required:

(a) Calculate the credit sales for the year 2015.

(b) Provide the journal entry that was made to write-off the uncollectible amounts during 2015.

(c) Ignore your answer to (a) and assume that credit sales for 2015 were $4.75 million. Prepare the bad debts adjusting entry assuming that management estimates that 4.0% of the credit sales would be uncollectible.

(d) After recording your entry from part (c), is the balance in the allowance for doubtful accounts adequate? Explain.

Reference no: EM131815780

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