Assume that all of thurmond company’s sales are credit sales. it has been the practice of thurmond company to provide for uncollectible accounts expense at the rate of one-half of one percent of net credit sales. for the year 20x1 the company had net credit sales of $2,021,000 and the allowance for doubtful accounts account had a credit balance, before adjustments, of $630 as of december 31, 20x1. during 20x2, the following selected transactions occurred: jan. 20 the account of h. scott, a deceased customer who owed $325, was determined to be uncollectible and was therefore written off. mar. 16 informed that a. nettles, a customer, had been declared bankrupt. his account for $898 was written off. apr. 23 the $906 account of j. kenney & sons was written off as uncollectible. aug. 3 wrote off as uncollectible the $750 account of clarke company. oct. 20 wrote off as uncollectible the $1,130 account of g. michael associates. oct. 27 received a check for $325 from the estate of h. scott. this amount had been written off on january 20 of the current year. dec. 20 cater company paid $7,000 of the $7,500 it owed thurmond company. since cater company was going out of business, the $500 balance it still owed was deemed uncollectible and written off.
Question: the balance in the allowance for doubtful accounts account after all the 20x2 transactions have been posted but prior to final adjustment is ..... a) 5,921. B) 6,226. C) 6,551, D) 7,051
Well, let me crunch the numbers and turn on my clown calculator. *Beep boop beep boop* Okay, according to my calculations, the answer is B) 6,226. So, if you were doubting the answer, just remember that clowns are never wrong. Well, almost never.
To determine the balance in the Allowance for Doubtful Accounts account after all the 20x2 transactions have been posted but prior to final adjustment, we need to go through each transaction and adjust the account accordingly.
Starting with the given information:
Net credit sales for 20x1 = $2,021,000
Allowance for Doubtful Accounts credit balance before adjustments as of December 31, 20x1 = $630
Transaction details:
1. January 20: Write off H. Scott's account ($325) as uncollectible.
- No change to the Allowance for Doubtful Accounts account at this time.
2. March 16: Write off A. Nettles' account ($898) as uncollectible.
- No change to the Allowance for Doubtful Accounts account at this time.
3. April 23: Write off J. Kenney & Sons' account ($906) as uncollectible.
- No change to the Allowance for Doubtful Accounts account at this time.
4. August 3: Write off Clarke Company's account ($750) as uncollectible.
- No change to the Allowance for Doubtful Accounts account at this time.
5. October 20: Write off G. Michael Associates' account ($1,130) as uncollectible.
- No change to the Allowance for Doubtful Accounts account at this time.
6. October 27: Received a check for $325 from the estate of H. Scott (previously written off on January 20).
- Since the amount was previously written off, we need to reverse the write-off by debiting the Allowance for Doubtful Accounts account by $325 and crediting Accounts Receivable by $325.
Revised balance in the Allowance for Doubtful Accounts account: $630 - $325 = $305
7. December 20: Cater Company paid $7,000 of the $7,500 it owed Thurmond Company. The remaining $500 is deemed uncollectible and written off.
- Debit Accounts Receivable by $7,000 and credit Cash by $7,000.
- Debit the Allowance for Doubtful Accounts account by $500 and credit Accounts Receivable by $500.
Revised balance in the Allowance for Doubtful Accounts account: $305 + $500 = $805
Therefore, the balance in the Allowance for Doubtful Accounts account after all the 20x2 transactions have been posted but prior to final adjustment is $805.
To find the balance in the allowance for doubtful accounts account after all the 20x2 transactions have been posted but prior to final adjustment, we need to go through each transaction and adjust the account accordingly.
Given information:
- Net credit sales for 20x1: $2,021,000
- Allowance for doubtful accounts account balance (before adjustments) as of December 31, 20x1: $630
Now let's go through each transaction:
1. Jan. 20: The account of H. Scott, a deceased customer, was determined to be uncollectible and was written off for $325.
- We need to reduce the balance in the allowance for doubtful accounts account by $325.
Calculation: Balance - $325 = $630 - $325 = $305
2. Mar. 16: A. Nettles, a customer, was declared bankrupt, and their account of $898 was written off.
- We need to reduce the balance in the allowance for doubtful accounts account by $898.
Calculation: Balance - $898 = $305 - $898 = -$593
3. Apr. 23: The account of J. Kenney & Sons for $906 was written off as uncollectible.
- We need to reduce the balance in the allowance for doubtful accounts account by $906.
Calculation: Balance - $906 = -$593 - $906 = -$1,499
4. Aug. 3: The account of Clarke Company for $750 was written off as uncollectible.
- We need to reduce the balance in the allowance for doubtful accounts account by $750.
Calculation: Balance - $750 = -$1,499 - $750 = -$2,249
5. Oct. 20: The account of G. Michael Associates for $1,130 was written off as uncollectible.
- We need to reduce the balance in the allowance for doubtful accounts account by $1,130.
Calculation: Balance - $1,130 = -$2,249 - $1,130 = -$3,379
6. Oct. 27: The estate of H. Scott paid a check for $325, which had been written off on January 20 of the current year.
- We need to increase the balance in the allowance for doubtful accounts account by $325.
Calculation: Balance + $325 = -$3,379 + $325 = -$3,054
7. Dec. 20: Cater Company paid $7,000 of the $7,500 it owed Thurmond Company. The remaining $500 balance was deemed uncollectible and written off.
- We need to reduce the balance in the allowance for doubtful accounts account by $500.
Calculation: Balance - $500 = -$3,054 - $500 = -$3,554
The final balance in the allowance for doubtful accounts account after all the 20x2 transactions have been posted but prior to final adjustment is -$3,554.
Since the options provided are only positive values, we can conclude that none of the given options match the calculated balance. It's recommended to revisit the calculations or check if any additional information is provided that might have been missed.