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The Following Transactions Occurred Over The Months of September To

The document describes transactions that occurred at Nicole's Getaway Spa between September and December 2014. It includes sales of merchandise to different businesses on account, along with a payment received from one business. The document asks to record journal entries for each transaction, calculate the allowance for doubtful accounts, and journalize the bad debt expense. It also asks to calculate the accounts receivable turnover ratio and compare it to a competitor.

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Taimour Hassan
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99 views1 page

The Following Transactions Occurred Over The Months of September To

The document describes transactions that occurred at Nicole's Getaway Spa between September and December 2014. It includes sales of merchandise to different businesses on account, along with a payment received from one business. The document asks to record journal entries for each transaction, calculate the allowance for doubtful accounts, and journalize the bad debt expense. It also asks to calculate the accounts receivable turnover ratio and compare it to a competitor.

Uploaded by

Taimour Hassan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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The following transactions occurred over the months of

September to #2765
The following transactions occurred over the months of September to December 2014 at
Nicole's Getaway Spa (NGS). September Sold spa merchandise to Ashley Welch Beauty for
$1,800 on account; the cost of these goods to NGS was $900. October Sold merchandise to
Kelly Fast Nail Gallery for $450 on account; the cost of these goods to NGS was
$200.November Sold merchandise to Raea Gooding Wellness for $300 on account; the cost of
these goods to NGS was $190. December Received $1,200 from Ashley Welch Beauty for
payment on its account.Required:1. Prepare journal entries for each of the transactions.
Assume a perpetual inventory system.2. Estimate the Allowance for Doubtful Accounts required
at December 31, 2014, assuming the only receivables outstanding at December 31, 2014, arise
from the transactions listed above. NGS uses the aging of accounts receivable method with the
following uncollectible rates: one month, 2%; two months, 5%; three months, 20%; more than
three months, 35%.3. The Allowance for Doubtful Accounts balance was $47 (credit) before the
end-of-period adjusting entry is made. Prepare the journal entry to account for the Bad Debt
Expense.4. Assume the end of the previous year showed net accounts receivable of $800, and
net sales for the current year is $9,000. Calculate the accounts receivable turnover ratio (round
to one decimal place).5. Audrey's Mineral Spa has an accounts receivable turnover ratio of 12.0
times. How does NGS compare to this competitor?View Solution:
The following transactions occurred over the months of September to

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