Question

Wilson Leather Products sells leather clothing at both wholesale and retail. The company has found that there is a higher rate of uncollectible accounts from retail credit sales than from wholesale credit sales. Wilson computes its estimated loss from uncollectible accounts at the end of each year. The amount is based on the rates of loss that the firm has developed from experience for each division A separate computation is made for each of the two types of sales. The firm uses the percentage of net credit sales method. As of December 31, 2019. Accounts Receivable has a balance of $395.000, and Allowance for Doubtful Accounts has a debit balance of $356. The following table provides a breakdown of the credit sales for the year 2019 and the estimated rates of loss: Category Wholesale Retail Amount $2,070,000 564,000 Estimated Rate of Loss 0.5% 1.2

Answer 1

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Solution :- 6 estimated the two compote the for each of the year : amount of categories uncollectible accounts of met credit Sales expense for Wholesale ($2670000 x 0.54) Retail ($564000 x 1.2-10) § 10350 $ 6768 1718 ② to record the provision for estimated prepare journal entry Uncollectible accounts: credit particulars Dati 2019 Debit $17118 $ 17118 Dec-31 uncollectible Accounts expense Ak Dr To Allowance for Dabliful Accounts (Being to record estimated losses from uncollectible accounts for the year, based on out of net whole sale credit sales is 1.21. of retail net cyedit sales). Allowance sheet of for Doubtful wilson leather Cloonts product Show how Accounts Recevable & should appear on the balance al of December 1, 2019. Wilson leather products partial Balance sheet December 31, 2019 $395000 $ (16762) Accounts Receivable Less: - Allowance for Doubtful Accounts [$ 1718-356) 1378238

© Record G Record entry to write off a clount determined to be uncollectible Date Particulars Debit credit Jan 20 2020 XXX Allowance for Doubtful Debt ale or To Accounts Receivable I columbus clothier (Being to write oft account determined to be uncollectible) ③ to off Record which entry was reverse collected Jan 20 in entry, writing fall today: credit Debit Date particulars Now ab, 2020 A coonts Receivable (edombos al Dr I clothich To Allowance for Doubrful a court (Bung to reverse entry dated Jan 20, writing off this account which was collected in fall today) 6 Compute Teported the in net accounts financial recovable Statements amount that should for the year ended Net for Accounts Receivable December 31, 2019 the year ended Should be 378238 (Refer point ).