п»їChapter a few Case -- Stem Company (A)*
On Dec 31, 06\, before the annually financial statements were ready, the control of the Come Corporation examined certain transactions that influenced accounts receivable and the allocation for doubtful accounts. The controller initially examined the December thirty-one, 2005, "balance sheet" (Exhibit 1). A future review of the year's ventures applicable to accounts receivable revealed the things listed below: 1 ) Sales about account during 2006 amounted to $9, 965, 575.
installment payments on your Payment received on accounts receivable during 2006 totaled $9, 685, 420. 3. During the year, accounts receivable amassing $26, 854 were regarded uncollectible and were created off. some. Two accounts that had been drafted off as uncollectible in 2005 had been collected 5 years ago. One are the cause of $2, 108 was paid in full. An incomplete payment of $1, 566 was made by Hollowell Organization on another account that originally had amounted to $2, 486. The control mechanism was reasonably sure this kind of account would be paid fully because trustworthy reports had been circulating which the trustee in bankruptcy for the Hollowell Company might pay almost all obligations 95 cents on the dollar. your five. The Permitting for Debt was altered to equivalent 3 percent of the balance in Accounts Receivable at the conclusion of the yr.
1 . Analyze the effect of each of the transactions in terms of its impact on Accounts Receivable, Allowance for Doubtful Accounts, and some other account that may be involved, and prepare required journal items. 2 . Provide the correct quantites for Accounts Receivable and the Allowance pertaining to Doubtful Accounts as of 12 , 31, 2006, after the transactions affecting these people had been recorded. 3. Determine the receivables turnover ratio as of 12 , 31, 06\. Assume that amounts for items other than those described in the case are the same because on January 31, 2006.
As of December 23, 2095