Chancellor Company Began 2013 with Balances in Accounts Receivable and Allowance

question 105

Essay

Chancellor Company began 2013 with balances in accounts receivable and allowance for doubtful accounts of $88,600 and $3,350, respectively. The company reported credit sales of $980,500 during the year, and wrote off $2,800 of uncollectible accounts. Chancellor Company prepared the following aging schedule on December 31, 2013: Required:
a) Prepare general journal entries to record the 2013 credit sales, collection of accounts receivable, write-off of uncollectible accounts, and estimate of uncollectible accounts.
b) What is Chancellor Company's net realizable value of receivables after all of the above entries have been made?

Understand the accounting treatments for various corporate transactions.

Recognize the rights of shareholders and how these affect corporate governance.

Distinguish between compensatory and noncompensatory stock option plans.

Understand the role and requirements of the Securities and Exchange Commission concerning corporate financial statements.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs — direct materials, direct labor, and both variable and fixed manufacturing overhead — in the cost of a product.

Operating Income

A measure of a company's profit that excludes non-operating expenses and revenues, focusing solely on the income generated from its core business operations.

Inventory Levels

The quantity of goods and materials on hand at a particular time within a company.

Variable Costing Income Statement

A financial statement showing the costs that vary directly with the level of production, separated from fixed costs.