Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 72

Accounting for Receivables and Uncollectible Accounts
The following transactions occurred over the months of September to December 2014 at Nicole's Getaway Spa (NGS).

Required:
1. Prepare journal entries for each of the transactions. Assume a perpetual inventory system.
2. Estimate the Allowance for Doubtful Accounts required at December 31, 2014, assuming the only receivables outstanding at December 31, 2014, arise from the transactions listed above. NGS uses the aging of accounts receivable method with the following uncollectible rates: one month, 2%; two months, 5%; three months, 209o; more than three months, 35%.
3. The Allowance for Doubtful Accounts balance was $47 (credit) before the end-of-period adjusting entry is made. Prepare the journal entry to account for the Bad Debt Expense.
4. Assume the end of the previous year showed net accounts receivable of $800, and net sales for the current year is $9,000. Calculate the accounts receivable turnover ratio (round to one decimal place).
5. Audrey's Mineral Spa has an accounts receivable turnover ratio of 12.0 times. How does NGS compare to this competitor