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Subject Topic: Cash collected from credit sales problem (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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CPA08va
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Joined: 26 Apr 2008
Location: United States
Online Status: Offline
Posts: 116
Posted: 19 Jul 2009 at 17:50 | IP Logged  

Disregard my earlier solution, I brought the allowance balance to 500 instead of crediting it by 500.  Best way to solve this problem is using JE's and T accounts.

 My allowance T account has the following CR 2000 (Beg Bal), 500 (CR during period) and DR of 1000 (W/Off of A/R), resulting in a net balance of 1500 CR.

Similarly, for AR Beg Bal is DR of 5000.  1000 w/off CR and you have to assume that AR is increased when the Allowance account is credited for 500, so AR new DR balance is 34,500.  Add the allowance 1500 to get to gross AR of 36,000.

100-36 = 68.  This is a tough problem - hope we don't see any like this.



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