Determine the balances of Accounts receivable and Bad debt expense at December 31, 2
Determine the balances of Accounts receivable and Bad debt expense at December 31, 2014.?
Update: Could use some help with this question!
information:
during 2014, patchwork had the following transactions:
1. on June 1 2014, sales of $80,000 to a major customer were settled, with patchwork accepting an $80,000 one year note bearing 7% interest payable at maturity. The $80,000 is not included in the total credit sales amount below.
2. patchwork factors some of its accounts receivable at the end of the year. Accounts totalling $60,000 are transferred to Primary factors inc with recourse. Primary factors retains 5% of the balances, and will receive the collections directly from patchwork's customers. Patchwork is assessed a finance charge of 6% on this transfer. The fair value of the recourse obligation is $7,000.
3. patchwork wrote off $3,200 of accounts receivable during 2014.
4. based on the latest available information, the 2014 allowance for doubtful accounts should have a balance of 12,000 at December 31 2014.
Additional info:
included in the cash balance at December 31 2014 are: chequing account balance of $9,600, postage stamps of $100, petty cash of $300, coins and currency on hand of $3000, and postdated cheques from customers of $2,000. Patchwork is a private company that follows ASPE.
Following account balances:
12/31/2013 12/31/2014
cash $20,000 $15,000
A/R 90,000 ?
A/4/D/A 8,500 ?
Inventory 85,000 80,000
Current Liab. 80,000 86,000
Total credit sales 600,000 550,000
Collections on A/R 440,000 500,000
Questions:
a. prepare journal entry for factoring of AR to primary factors inc. - I already did this.
b. determine balances of AR and bad debts expense at December 31 2014 - need help !
c. prepare current assets section of patchworks statement of financial position at December 31 2014 - need help!
