The following information is available for K.M.R. Company, which uses the allowance method of accounting for uncollectible accounts.
K.M.R. estimates that 1% of sales on account will be uncollectible. After several attempts at collection during 2014, K.M.R. wrote off an account of $200 that could not be collected.
Required:
Indicate the effects on the financial statements of the following events:
a) 2014 sales
b) 2014 collections on account
c) Write-off of the uncollectible account
d) Uncollectible accounts expense for 2014
Round amounts to nearest dollar. Show amounts of increases and decreases. For cash flows, indicate whether they are operating, investing, or financing activities.

Question

The following information is available for K.M.R. Company, which uses the allowance method of accounting for uncollectible accounts.  
K.M.R. estimates that 1% of sales on account will be uncollectible. After several attempts at collection during 2014, K.M.R. wrote off an account of $200 that could not be collected.
Required:
Indicate the effects on the financial statements of the following events:
a) 2014 sales
b) 2014 collections on account
c) Write-off of the uncollectible account
d) Uncollectible accounts expense for 2014
Round amounts to nearest dollar. Show amounts of increases and decreases. For cash flows, indicate whether they are operating, investing, or financing activities.

Quizplus · Accepted Answer

The Answer of The following information is available for K.M.R. Company, which uses the allowance method of accounting for uncollectible accounts.  
K.M.R. estimates that 1% of sales on account will be uncollectible. After several attempts at collection during 2014, K.M.R. wrote off an account of $200 that could not be collected.
Required:
Indicate the effects on the financial statements of the following events:
a) 2014 sales
b) 2014 collections on account
c) Write-off of the uncollectible account
d) Uncollectible accounts expense for 2014
Round amounts to nearest dollar. Show amounts of increases and decreases. For cash flows, indicate whether they are operating, investing, or financing activities.

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