Reference no: EM132820189
Problem - At the beginning of current year, Nostalgia Company reported the following information:
Accounts receivable 1,500,000
Allowance for doubtful accounts 60,000
The following summary transactions affecting accounts receivable occurred during the current year:
Sales - all on account 2/10, 1/15, n/60 7,935,000
Cash received from customers 8,000,000
The cash received from customers included the following:
Customers paying within the 10-day discount period 4,410,000
Customers paying within the 15-day discount period 2,475,000
Recovery of accounts written off 15,000
Customers paying beyond the discount period ?
Accounts receivable written off as worthless 55,000
Credit memoranda for sales return 30,000
Required -
a. Prepare journal entries to record the transactions.
b. Prepare the adjustment for doubtful accounts if the entity follows the percentage of accounts receivable consistently.
c. Determine the net realizable value of accounts receivable at year-end?