Reference no: EM133167159
Question - The unadjusted trial balance of Magenta Company showed the following balances at its December 31, 2013 year-end:
|
|
Debit
|
Credit
|
|
Accounts Receivable
|
490,000
|
|
|
Allowance for Doubtful Accounts
|
|
32,460
|
During the year 2014, the following transactions occurred:
1. Sales totalled $1,725,000, of which 85% were credit sales (cost of sales $1,207,500).
2. Sales returns were $49,000, all regarding credit sales. The returned merchandise was scrapped.
3. An account for $29,000 which had previously been written off as uncollectible was recovered.
4. Accounts totalling $132,500 were written off as uncollectible.
5. In addition to the amount recovered in "c" above, accounts receivable of $1,500,000 were also collected on which sales discounts of $26,000 were taken.
Required -
1. Prepare journal entries to record transactions (a) through (e). Show all calculations
2. Prepare the December 31, 2014 journal entry to estimate bad debts, assuming uncollectible accounts are estimated to be 6% of net credit sales. Show all calculations.
3. Show how accounts receivable will appear on the December 31, 2014 balance sheet.