Coffeldt Sign Company Uses the Allowance Method in Accounting for Uncollectible

question 240

Essay

Coffeldt Sign Company uses the allowance method in accounting for uncollectible accounts. Past experience indicates that 1% of net credit sales will eventually be uncollectible. Selected account balances at December 31, 2013, and December 31, 2014, appear below: Instructions
(a) Record the following events in 2014.
Aug. 10 Determined that the account of Sue Lang for $1,000 is uncollectible.
Sept. 12 Determined that the account of Tom Woods for $4,000 is uncollectible.
Oct. 10 Received a check for $550 as payment on account from Sue Lang, whose account had previously been written off as uncollectible. She indicated the remainder of her account would be paid in November.
Nov. 15 Received a check for $450 from Sue Lang as payment on her account.
(b) Prepare the adjusting journal entry to record the bad debt provision for the year ended December 31, 2014.
(c) What is the balance of Allowance for Doubtful Accounts at December 31, 2014?

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Definitions:

Universal Copyright Convention

An international treaty that protects the rights of creators of copyrighted works worldwide.

Intellectual Property Laws

Laws that protect the creations of the mind, including inventions, literary and artistic works, designs, and symbols, names, and images used in commerce.

Literary Works

Intellectual creations expressed in written form, such as novels, poems, plays, and essays, often protected under copyright law.

Berne Convention

An international agreement governing copyright laws to protect the rights of authors over their literary and artistic works across countries.