The Following Information Is Available for Parsons Corporation, Which Uses

question 107

Essay

The following information is available for Parsons Corporation, which uses the allowance method of accounting for uncollectible accounts. $\begin{array}{l}2014 \text {, the first year of operations }\\\begin{array}{ll}\text { Sales on account } & \$ 66,000 \\\text { Collections on account } & \$ 58,000\end{array}\end{array}$
Parsons expects 1% of sales on account to be uncollectible.
Required:
a) What is the balance of Accounts Receivable at the end of 2014?
b) What is the amount of uncollectible accounts expense for 2014? Use the financial statements model below to indicate the effect of recording uncollectible accounts expense. Include dollar amounts of increases and decreases.
c) In 2015, after several attempts of collection, Parsons wrote off accounts that could not be collected in the amount of $300. Use the financial statements model that is provided to indicate the effect of the write-off on the financial statements, indicating amounts of increases and decreases.
d) Later in 2015, Erin received a check for $50 from one of the customers whose account had been written off in (c) above. Use the financial statements model to indicate the effect of the collection of the $50 on the financial statements, indicating amounts of increases and decreases.

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Definitions:

Hemolytic Anemia

A condition where red blood cells are destroyed faster than they can be made.

Pernicious Anemia

A form of anemia caused by the body's inability to absorb vitamin B12, often due to a lack of intrinsic factor.

Iron Deficiency Anemia

A common type of anemia that occurs when the body does not have enough iron, leading to reduced production of hemoglobin and causing symptoms like fatigue and weakness.

Hemorrhagic Anemia

A condition characterized by a decrease in the number of red blood cells in the bloodstream, caused by excessive bleeding.