Financial accounting 16th Edition by Jan Williams,Susan Haka,Mark Bettner ,Joseph Carcello

تمرين 6

Redstone Mill is a manufacturer that makes all sales on 30-day credit terms.nnual sales are approximately $40 million.t the end of 2014, accounts receivable were presented in the company's balance sheet as follows:

During 2015, $230,000 of specific accounts receivable were written off as uncollectible.f these accounts written off, receivables totaling $18,000 were subsequently collected.t the end of 2015, an aging of accounts receivable indicated a need for a $150,000 allowance to cover possible failure to collect the accounts currently outstanding.
Redstone Mill makes adjusting entries for uncollectible accounts only at year-end.Instructions
a.repare the following general journal entries:
1.ne entry to summarize all accounts written off against the Allowance for Doubtful Accounts during 2015.
2.ntries to record the $18,000 in accounts receivable that were subsequently collected.
3.he adjusting entry required at December 31, 2015, to increase the Allowance for Doubtful Accounts to $150,000.
b.otice that the Allowance for Doubtful Accounts was only $80,000 at the end of 2014, but uncollectible accounts during 2015 totaled $212,000 ($230,000 less the $18,000 reinstated).o these relationships appear reasonable, or was the Allowance for Doubtful Accounts greatly understated at the end of 2014 Explain.