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Q1) Cyndi Corporation reported net accounts receivable on its September 30, 2008 balance sheet of $54,320 (this amount is net of allowance for doubtful accounts of $3,810). Cyndi Corporation has September 30 year-end.

Gross sales for year ended September 30, 2009 totalled $2,724,210 given below:

Credit sales

1,224,410

Cash sales

1,499,800

Total sales

$2,724,210

Credit sales represent credit granted by Cyndi Corporation. Credit terms are 2/10, net 60.

Cyndi Corporation permits customers to return items for 90 days from date of sale. For year ending September 30, 2009, customers returned items with sales price of $195,200 as follows:

Credit sales

123,400

Cash sales

73,000

Total returns

$196,400

Cash customers were given cash refund, whereas credit customers were given credit to their account. Returns by credit customers were all made before payment was received.

For year ending September 30, 2009, credit customers paid $1,036,600 in cash. Of this amount $184,000 was paid outside discount period. Balance had allowed discount deducted from amount owed (that is amount of cash received is 98% of amount owed).

For year ending September 30, 2009, Cyndi Corporation wrote off $24,660 of accounts receivable as uncollectible.

Sales returns and sales discounts are recorded as contra-revenues.

Required:

a. Make summary journal entries related to (1) sales, (2) sales returns, (3) collections of accounts receivable, and (4) prepare-offs of accounts receivable for year ended September 30, 2009.

b. Complete following ledger T account for asset accounts receivable, starting with account balance as at September 30, 2008. After all transactions have been entered find out account balance as at September 30, 2009. (Balance must be number reported in g. below)

c. Make journal entry to record bad debt expense for year ending September 30, 2009 given aging of accounts receivable as at September 30, 2009 and amount expected to be uncollectible in each category:

Age category 

Amount 

% uncollectible 

Current accounts

54500

0.02

1-3 months overdue

16980

0.1

4 months or more overdue

9000

0.4

 

80480

 

d. Complete following ledger T account for contra asset allowance for doubtful accounts, starting with account balance as at September 30, 2008. After all transactions have been entered find out account balance as at September 30, 2009.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M916958

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