The Sales, All on Account, of Hendricks Company in Year

question 2

Essay

The sales, all on account, of Hendricks Company in Year 1, its first year of operations, were $800,000.Collections totaled $600,000.On December 31, Year 1, Hendricks Company estimated that 3 percent of all sales would probably be uncollectible.On that date, specific accounts in the amount of $18,000 were written off.
Hendricks Company's unadjusted trial balance (after all nonadjusting entries were made and after all write-offs of specific accounts receivable identified during Year 2 as being uncollectible) on December 31, Year 2, includes the following accounts and balances:
$\begin{array}{ll}\text { Accounts Receivable } & 500,000 \\\text { Allowance for Uncollectibles } & 16,000 \\\text { Other Debits } & 1,484,000\\\text { Sales } && 900,000 \\\text { Other Credits } && 1,100,000\end{array}$ On December 31, Year 2, Hendricks Company carried out an aging of its accounts receivable balances and estimated that the Year 2 ending balance of accounts receivable contained $26,000 of probable uncollectibles.It made adjusting entries appropriate for this estimate.Some of the $900,000 sales during Year 2 were for cash and some were on account; these data purposefully omit the amounts.
Required:
a. What was the balance in the Accounts Receivable account at the end of Year 1? Give the amount and whether debit or credit.
b. What was the balance in the Allowance for Uncollectible Accounts at the end of Year 1? Give the amount and whether debit or credit.
c. What was bad debt expense (Revenue Contra for Uncollectibles) for Year 2?
d. What was the amount of specific accounts receivable written off as being uncollectible during Year 2?
e. What were total cash collections in Year 2 from customers (for cash sales and collections from customers who had purchased on account in either Year 1 or Year 2)?
f. What was the net balance of accounts receivable included in the balance sheet asset total for December 31, Year 2?

---

Definitions:

Temporal Discounting

The tendency to value immediate rewards more highly than future rewards, leading to decisions that favor short-term gains over long-term benefits.

Omission Bias

The tendency to favor inaction over action, based on the assumption that harm caused by doing nothing is less morally reprehensible than harm caused by acting.

Reactance

A psychological reaction that occurs when an individual feels their freedom to choose is being restricted, leading them to resist or do the opposite of what is being imposed.

Dissonance

A psychological conflict resulting from incongruous beliefs and attitudes held simultaneously.