At December 31, 2011, Ihrke Imports reported this information on its balance sheet. Accounts receivable $671,000 Less: Allowance for doubtful accounts 44,000

Problem 8-2A

At December 31, 2011, Ihrke Imports reported this information on its balance sheet.

Accounts receivable		$671,000
Less: Allowance for doubtful accounts		44,000

During 2012, the company had the following transactions related to receivables.

1.		Sales on account		$2,950,000
2.		Sales returns and allowances		56,100
3.		Collections of accounts receivable		2,100,000
4.		Write-offs of accounts receivable deemed uncollectible		40,200
5.		Recovery of bad debts previously written off as uncollectible		13,200

 

Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Enter the January 1, 2012, balances in Accounts Receivable and Allowance for Doubtful Accounts, post the entries to the two accounts and determine the balances. (Post entries in the order of journal entries posted in the previous part)

Prepare the journal entry to record bad debts expense for 2012, assuming that aging the accounts receivable indicates that estimated bad debts are $86,000. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Compute the receivables turnover ratio. (Round answers to 1 decimal place, e.g. 12.5.)

Compute the average collection period (Round answers to 1 decimal place, e.g. 12.5.)

 

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