Part 1:William's card shop is planning to expand. Before it expands, the owner wants to review the uncollectible accounts. William asks you to calculate the percentage of uncollectible accounts per year.
|
Year
|
Net Sales
|
Uncollectible Accounts
|
|
Year 1
|
$ 23,000
|
$ 800
|
|
Year 2
|
28,750
|
1,200
|
|
Year 3
|
46,000
|
1,345
|
|
Year 4
|
52,000
|
1,150
|
Instruction:
Calculate the percentage of uncollectible accounts per year.
Part 2:
Below are the end-of-period account balances for several stationery and office supply companies:
|
Name of the Companies
|
Sales
|
Sales Discount
|
Sales Returns and allowances
|
Percentage of Net Sales Uncollectible
|
|
Andrews Co
|
$142,360
|
$1,423
|
$936
|
2
|
|
The Book Nook
|
$209,100
|
$3,180
|
$1,139
|
1
|
|
Cable Inc
|
$173,270
|
$1,730
|
$1,540
|
1 ½
|
|
Davis Inc
|
$65,460
|
$650
|
$690
|
2
|
|
Ever - Sharp Co
|
$95,085
|
$900
|
$1,035
|
1 ¼
|
Each company uses the percentage of net sales method to estimate its uncollectible accounts expense. The parentage used by each company is also listed.
Instructions:
- Calculate the amount of the adjustment for uncollectible accounts expense using the percentage of net sales method.
- Record the adjusting entry for the estimated uncollectible accounts expense for Davis Inc.