What is the balance is Allowance for Doubtful Accounts

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Reference no: EM132251271

Question - The financial statements for Anne Teak's Knick Knack Store show the following balances as of December 31, 2014:

  • Cash Sales: $1,500,000
  • Credit Sales: $6,800,000
  • Sales Returns and Allowance: $85,000
  • Sales Discounts: $228,000
  • Accounts Receivable: $1,900,000
  • Allowance for Doubtful Accounts: $54,000 (Credit)
  • Notes Receivable: $320,000

QUESTIONS:

1. An aging of accounts receivable indicates that $186,000 is expected to become uncollectible as of December 31, 2014. If the percentage of receivables method is used, what is the balance is Allowance for Doubtful Accounts after any adjustment is made?

2. Ignoring your answer to Question #1, based on its past history, Ivana Huggnow Corporation expects 3% of its net credit sales will become uncollectible as of December 31, 2014. If the percentage of net credit sales method is used, what adjusting entry, if any, should Anne Teak's Knick Knack Store make?

3. The notes receivable consists of a single 4-month note, bearing interest at 8%. This note was given to Anne Teak's Knick Knack Store, by its customer, Ty Coon on October 1, 2014. What adjusting entry, if any, should Anne Teak's Knick Knack Store make on December 31, 2014?

SPECIFIC INSTRUCTIONS: If a journal entry is required, type your response in the following format: DR (account name) $(amount) andCR (account name) $(amount).

Reference no: EM132251271

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