Reference no: EM132882137
Problem - Aging Accounts Receivable - On September 30, 2019 (the end of its fiscal year), Lufkin Corporation reported accounts receivable of $331,750 and an allowance for doubtful accounts of $16,700. During fiscal 2020, the following transactions occurred:
Credit sales (terms, n/EOM) $2,017,800
Collections on accounts receivable 1,956,000
Accounts receivable written off 16,200
On September 30, 2020, an aging of the accounts receivable balance indicated the following:
|
Age
|
Amount
|
Estimated Percentage Uncollectible
|
|
Under 30 days
|
$169,250
|
0.8%
|
|
30-90 days
|
100,000
|
1.6
|
|
91-180 days
|
55,900
|
5.0
|
|
181-360 days
|
38,200
|
15.0
|
|
Over 360 days
|
14,000
|
40.0
|
|
|
$377,350
|
|
Required -
1. Prepare the journal entries necessary to record the credit sales, collections on account, write-off of accounts receivable, and bad debts expense for Lufkin for fiscal 2020.
2. What are Lufkin's September 30, 2020, balances in Accounts Receivable and in its Allowance for Doubtful Accounts, and how will they be disclosed on the September 30, 2020, balance sheet?
3. Compute Lufkin's receivables turnover in days, assuming a 365-day business year. What is your evaluation of its collection policies?