On May 31,Cray Has $375,800 of Accounts Receivable

question 102

Essay

On May 31,Cray has $375,800 of accounts receivable.Cray uses the allowance method of accounting for bad debts and has an existing credit balance in the allowance for doubtful accounts of $14,250.
1.Prepare journal entries to record the following selected May transactions.The company uses the perpetual inventory system.
2.Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its May 31 balance sheet.
a.Sold $415,200 of merchandise (that cost $249,000)to customers on credit.
b.Received $465,800 cash in payment of accounts receivable.
c.Wrote off $15,800 of uncollectible accounts receivable.
d.In adjusting the accounts on May 31,its fiscal year-end,the company estimated that 4.0% of accounts receivable will be uncollectible.

---

Definitions:

Yield

The earnings generated and realized on an investment over a particular period, expressed as a percentage of the investment's cost or current market value.

Risk Premium

The extra return or reward that an investor expects to receive for taking a higher risk compared to a risk-free asset.

Cost of Debt

The effective rate that a company pays on its current debt, including loans and bonds, often considered in capital structure decisions.

GDP Price Index

A measure that tracks changes in the prices of goods and services included in the Gross Domestic Product, allowing for inflation-adjusted economic assessments.