Stallworth Company uses the direct write-off method of recording uncollectible accounts expense. A general journal and cash receipts journal are provided in the Working Papers.

Instructions:

Journalize the following transactions completed during the current year. Use page 4 of a general journal and page 6 of a cash receipts journal. Source documents are abbreviated as follows: memorandum, M; receipt, R.

Transactions:

Jan. 23. Rochelle Company's legal counsel notified Stallworth of its plans to declare bankruptcy. Write off the $325.15 account balance as uncollectible. M42.

Mar. 6. Received a$168.25 check from Norris Industries in full payment of its account. Norris Industries was never notified that Stallworth previously wrote off the account as uncollectible. M62 and R432.

May 9. Based on conversations with managers at Guice Corporation, the account is expected to become uncollectible, $421.05. M73.

July 30. Received a check from Zimmer Supply as a partial payment on its account that was previously written off as uncollectible,$250.00. M85 and R503.

West River, Inc., uses the allowance method of recording uncollectible accounts expense. The following information was obtained from West River's records for the current year:

$$\begin{array}{lrr} & \text { January } 1 & \text { December } 31 \\ \text { Accounts Receivable } & \$ 65,184.26 & \$ 72,184.95 \\ \text { Allowance for Doubtful Accounts } & 3,481.62 & 4,048.78 \\ \text { Net Sales on Account } & & 847,386.56\end{array}$$

A general journal and cash receipts journal are provided in the Working Papers.

Transactions:

Feb. 2. A phone call to Alex Yarber, president of Yarber Supply, confirmed that the company is intending to file bankruptcy. Alex stated that no money would likely be available to pay Yarber Supply's creditors. The Yarber account of $6,215.48 is over 180 days past due. M166.

Mar. 24. Last year, you wrote off the$2,084.65 balance of Innovation Central. The account was over 180 days past due and collection seemed doubtful. Today, you received a $2,084.65 check from Innovation Central along with a letter stating that the company wished to reestablish a credit account with your company. M178 and R555.

June 12. Received a reply to a collection request letter sent to Dennis Raborne. Dennis refuses to pay the remaining$62.00 of his bill, stating that the original bill was larger than the agreed-upon price. Although your records clearly indicate the $62.00 was an appropriate charge, your manager believes that further efforts to collect this account are pointless. M192.

Oct. 17. The U.S. Postal Service was unable to deliver a collection letter to Nancy Givens. Nancy owed$123.54 from an invoice dated January 16. M210.

Nov. 3. Today you received a $1,243.10 check from Yarber Supply. In the enclosed letter, Alex stated that the bankruptcy court ordered the company to pay 20 cents for every dollar owed to its creditors. Thus, the$1,243.10 is the only amount that Yarber Supply would ever be able to pay of its original account balance of $6,215.48. M222 and R621.

Instructions:

1. Journalize the selected transactions above that were completed during the current year. Use page 1 of a general journal and page 1 of a cash receipts journal. Source documents are abbreviated as follows: memorandum, M; receipt, R.

2. Journalize the adjusting entry for uncollectible accounts expense on December 31 of the current year. West River estimates that the amount of uncollectible accounts expense is equal to 1% of its net sales of$915,084.62.

3. Compute the accounts receivable turnover and days' sales in accounts receivable.

A form and general journal are provided in the Working Papers. A complete list of the accounts receivable, as of December 31, of Destin Warehouse follows:

$$\begin{array}{lrl}\textbf { Account } & \textbf { Amount } & \textbf { Invoice Date } \\ \text { Ballard Corporation } & \$ 2,383.70 & \text { August 11 } \\ \text { Colister Company } & 3,874.80 & \text { October } 12 \\ \text { Eads \& Godfrey } & 1,260.30 & \text { November 19 } \\ \text { Garrett, Inc. } & 2,031.00 & \text { September } 16 \\ \text { Jeffries Distributors } & 1,406.50 & \text { August 14 } \\ \text { McEwen Industries } & 2,722.10 & \text { November 5 } \\ \text { Perryman Company } & 2,047.20 & \text { December 3 } \\ \text { Ruffin Associates } & 3,615.20 & \text { October } 23 \\ \text { Turnage Supply } & 5,664.80 & \text { December } 14\end{array}$$

Instructions:

1. Age the accounts receivable by determining the age group for each invoice and totaling the invoice amounts in each age group category. Destin Warehouse's credit terms are n/30.

2. Calculate the estimated balance of Allowance for Uncollectible Accounts, using the following percentages: not yet due, 0.5 %; 1-30 days past due, 2.0%;31-60 days, 5.0%; 61-90 days, 30%; and over 90 days, 60%.

3. Journalize the adjusting entry for uncollectible accounts expense on December 31 of the current year. Use page 12 of a general journal. The Allowance for Uncollectible Accounts has a debit balance of $221.68 on December 31 of the current year before adjusting entries are recorded.

Select a workplace (yours or a friend's or relative's) and identify its required work safety procedures/equipment. Explain why you think these procedures/equipment are or are not useful.

Winters, Inc., uses the direct write-off method of recording uncollectible accounts expense. A general journal and a cash receipts journal are provided in the Working Papers. Use page 2 of a general journal and page 4 of a cash receipts journal. Source documents are abbreviated as follows: memorandum, M; receipt, R.

Transactions:

Feb. 3. Wrote off Loper Company's past due account as uncollectible, $115.81. M33.

Apr. 24. Wrote off Polk Supply's past due account as uncollectible,$95.00. M42.

May 14. Received cash in full payment of Loper Company's account, previously written off as uncollectible, $115.81. M51 and R221.

June 8. Received cash in full payment of Polk Supply's account, previously written off as uncollectible,$95.00. M64 and R259.

Why should the amount of an uncollectible account be removed from the assets of a business?

LMK Industries offers its customers n/30 credit terms. The turnover ratio for the prior year was 6.4. The following account balances were obtained from LMK Industries' records for the current year.

$$\begin{array}{lrr} & \textbf{ January 1} & \textbf{December 31} \\ \hline \text{Accounts Receivable} & \$ 126,468.15 & \$ 135,643.58 \\ \text{Allowance for Uncollectible Accounts} & 4,123.27 & 5,754.77 \\ \text{Net Sales on Account} & & 847,386.56 \end{array}$$

Calculate the accounts receivable turnover ratio for the current year.

As shown in the financial statements in Appendix B of this textbook, Home Depot's Consolidated Balance Sheets list "Receivables, net" under the heading "Current assets." This amount represents Home Depot's receivables after the allowance for uncollectible accounts estimate has been deducted. Additional information about these amounts is presented in Note 1, "Summary of Significant Accounting Policies."

1. Refer to the Consolidated Balance Sheets on page B-5 to identify the net amount of accounts receivable on January 28, 2018, and January 29, 2017.

Search through local newspapers or on the Internet for three advertisements that use any of the above tactics. Share with the class.

What are the two methods commonly used to estimate uncollectible accounts expense?

Goodrum, Inc., had net sales of $868,540.95 during the current year ended December 31. It estimates that the amount of uncollectible accounts expense is equal to 0.6% of net sales. Record the adjusting entry for uncollectible accounts expense.

Yang Supply offers its customers 2/10, n/ 30 credit terms. The turnover ratio for the prior year was 15.9. The following account balances were obtained from the records of Yang Supply for the current year.

$$\begin{array}{lrr} & \textbf{ January 1 } & \textbf{December 31} \\ \hline \text{Accounts Receivable} & \$ 65,856.05 & \$ 67,643.48 \\ \text{Allowance for Uncollectible Accounts} & 3,535.12 & 3,635.36 \\ \text{Net Sales on Account} & & 982,435.94 \end{array}$$

Calculate the accounts receivable turnover ratio for the current year.

NorthStar, Inc., uses the direct write-off method of recording uncollectible accounts expense. A general journal and a cash receipts journal are provided in the Working Papers. Use page 1 of a general journal and page 3 of a cash receipts journal. Source documents are abbreviated as follows: memorandum, M; receipt, R.

Transactions:

Jan. 14. Wrote off Sylvia Mendoza's past due account as uncollectible, $92.45. M25.

Feb. 12. Wrote off Conisha Martin's past due account as uncollectible, $62.48. M31.

June 20. Received cash in full payment of Sylvia Mendoza's account, previously written off as uncollectible, $92.45. M54 and R148.

Aug. 25. Received cash in full payment of Conisha Martin's account, previously written off as uncollectible, $62.48. M89 and R195.

What is the formula for calculating the accounts receivable turnover ratio?