Reference no: EM131979329
Question - A company reported the following items for 2013:
Accounts receivable balance, Jan 1, 2013 $80,000
Allowance for uncollectible accounts balance, Jan. 1, 2013 12,000
Total credit sales during 2013 400,000
Total cash collections on accounts receivable during 2013 360,000
Account written off during 2013 15,000
The account balances shown above are normal balances. Experience indicates that 4% of the gross accounts receivable balance at the end of each year ultimately will be uncollectible OR 1.5% of credit sales. During 2014, an account valued at $12,000 was written off. Later in the year, the customer showed up and paid the full amount.
Required: Record the journal entries for a) the adjusting entry at the 2013 year end assuming the balance sheet approach, b) the adjusting entry at the 2013 year end assuming the income statement approach, c) the write off in 2014, and d) the later recovery.