Reference no: EM131789103

Question - On December 31, 2010, Great Pizza company's records showed the following results for the year:

Cash sales.............$601,250

Credit sales .......... $1,178,000

In addition, the unadjusted trial balance included the following items:

Accounts receivable..............................$356,700 Debit

Allowance for doubtful accounts ......... $5,250 Debit

Required:

(a) Prepare the adjusting entry needed on the books of Great Pizza to recognize uncollectible accounts under each of the following independent assumptions:

i. Uncollectible accounts are estimated to be 1% of total sales.

ii. Uncollectible accounts are estimated to be 2% of credit sales.

iii. An analysis suggests that 5% of outstanding accounts receivable on December 31,2010, will become uncollectible.

(b) Show how accounts receivable and the allowance for doubtful accounts would appear on the December 31, 2010, balance sheet given the facts in question #24, requirement (a) ii.

(c) Show how accounts receivable and the allowance for doubtful accounts would appear on the December 31, 2010, balance sheet given the facts in question #24, requirement (a) iii.