Reference no: EM132882139

Problem - Examination of Accounts Receivable - You are engaged in the annual examination of Faulane Company, a wholesale office supply business, for the year ended June 30, 2019. You have been assigned to examine the accounts receivable. The following information is available at June 30, 2019.

1. Your review of accounts receivable and discussions with the client disclose that the following items are included in the accounts receivable (of both the control and the subsidiary ledgers):

a. Accounts with credit balances, representing customer advances, total $1,900

b. Receivables from officers total $5,300

c. Advances to employees total $1,250

d. Accounts that are definitely uncollectible total $1,120

2. Uncollectible accounts are estimated to be 0.50% of the year's net credit sales of $18,125,000.

Required - Prepare any journal entry (entries) required to:

1. reclassify items that are not trade accounts receivable

2. write off uncollectible accounts

3. adjust the allowance for doubtful accounts