At the beginging of 2010, EZ Tech Company accounts receivable Balance was 140,00

Question

At the beginging of 2010, EZ Tech Company accounts receivable Balance was 140,000
and the balance in Allowance for Doubtful Accounts was 2,350 (Cr.). EZ Tech sales in
2010 were 1,050,000, 80 % of which were on credit, Collections on account during the year were 670,00. the company wrote off 4,000 of uncollectible accounts during the year.
1. prepare summary journal entries related to the sale, collections, and write-offs of accounts receivable during 2010.
2. prepare journal entries to recognize bad debts assuming that(a) bad debts expense is 3% of credit sales and(b)amounts expected to be uncollectectible are 6% of the year end accunts receivable.
3.What is the net realizable value of accounts receivable on dec 31,2010, under each assumption in (2).

Explanation / Answer

Journal entries for the year 2010 Date Details Debit Credit Accounts Receivable $140,000            Sales 140,000 Accounts Receivables          Sales 840,000 (To record 80% of credit saales) 840,000 Cash 670,000      Accounts Receivable                   670,000 (To record cash collections) Bad Debt Expense 4,000     Allowance for Doubtful Accounts 4,000 (To record uncollectable accounts) Bad Debt Expense 25,200 To record Bad debtexpense) 25,200

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