On May 1. Cray has $$55,800 of accounts receivable. Cray uses the allowance meth

Question

On May 1. Cray has $$55,800 of accounts receivable. Cray uses the allowance method of accounting for bu debts and has an existing credit balance in the allowance for doubtful accounts of S13,900. a. Prepare journal entries to record the following selected May transactions. The company uses the perpe inventory system. Use the date May 31 all of these transactions. 1). Sold S515,200 of merchandise (that cost $349,000) to customers on credit 2). Received $525,800 cash in payment of accounts receivable 3). Wrote off S15,800 of uncollectible accounts receivable 4) In adjusting the accounts on May 31, its fiscal year-end, the company estimated that 4.50% of accounts receivable will be uncollectible. b. Show how Accounts Recivable and the Allowance for Doubtful Accounts appear on its May 31 balans sheet. (On back) Date Account Titles and Explanation Debit

Explanation / Answer

Date Account titles and Explanations Debit Credit 31-May Accounts receivable 515,200 sales 515,200 cost of goods sold 349,000 Merchandise inventory 349,000 31-May Cash 525,800 Account receivable 525,800 31-May allowance for uncollectible accounts 15,800 Accounts receivable 15,800 31-May Bad debts expense 25,723 Allowance for uncollectible acounts 25,723 Working notes Account receivable 1-May 555,800 cash 525,800 31-May 515,200 written off 15,800 End bal 529,400 Allownce for uncollectible accounts written off 15,800 Beg bal 13,900 adustment 25,723 End bal 23823 (529400*4.5%) 2) Balance sheet current assets Account receivable 529,400 less:Allowance for uncolledtible accounts 23,823 Net account receivable 505,577

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