At December 31, 2011, Ihrke Imports reported this information on its balance sheet.
| Accounts receivable Don't use plagiarized sources. Get Your Custom Essay on at december 31 2011 ihrke imports reported this information on its balance sheet 534454 For $10/Page 0nly | $600,000 |
| Less: Allowance for doubtful accounts | 37,000 |
During 2012, the company had the following transactions related to receivables.
| 1 | Sales on account | $2,500,000 |
| 2 | Sales returns and allowances | 50,000 |
| 3 | Collections of accounts receivable | 2,200,000 |
| 4 | Write-offs of accounts receivable deemed uncollectible | 41,000 |
| 5 | Recovery of bad debts previously written off as uncollectible | 15,000 |
Instructions
(a) Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable. (Omit cost of goods sold entries.)
(b) Enter the January 1, 2012, balances in Accounts Receivable and Allowance for Doubtful Accounts, post the entries to the two accounts (use T accounts), and determine the balances.
(c) Prepare the journal entry to record bad debts expense for 2012, assuming that aging the accounts receivable indicates that estimated bad debts are $46,000.
(d) Compute the receivables turnover ratio and average collection period.
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