The Cat Company obtained the following information from its accounting records for the year ended December 31, 2012:
Cat Company uses the percent-of-sales method, at 2.0% of credit sales, to estimate uncollectible accounts for 2012.
The president of the company wants to change to the aging-of-receivables method and estimates $12,450 as the uncollectible amount for 2012.
Prepare a schedule for the president showing the amount of the adjusting entry, ending balance in the allowance account, and the net realizable value of accounts receivable under each method.

Question

The Cat Company obtained the following information from its accounting records for the year ended December 31, 2012:
  Cat Company uses the percent-of-sales method, at 2.0% of credit sales, to estimate uncollectible accounts for 2012.
The president of the company wants to change to the aging-of-receivables method and estimates $12,450 as the uncollectible amount for 2012.
Prepare a schedule for the president showing the amount of the adjusting entry, ending balance in the allowance account, and the net realizable value of accounts receivable under each method.

Quizplus · Accepted Answer

The Answer of The Cat Company obtained the following information from its accounting records for the year ended December 31, 2012:
  Cat Company uses the percent-of-sales method, at 2.0% of credit sales, to estimate uncollectible accounts for 2012.
The president of the company wants to change to the aging-of-receivables method and estimates $12,450 as the uncollectible amount for 2012.
Prepare a schedule for the president showing the amount of the adjusting entry, ending balance in the allowance account, and the net realizable value of accounts receivable under each method.

The Cat Company Obtained the Following Information from Its Accounting