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Wilcox Mills Accounts Receivable Analysis

Wilcox Mills is a manufacturer that sells products on 30-day credit terms and had $30 million in annual sales in 2010. At the end of 2010, the company reported $3.1 million in accounts receivable and $80,000 in allowance for doubtful accounts. In 2011, $165,000 in specific accounts receivable were written off as uncollectible, though $15,000 of those were later collected. Based on an aging of accounts, the company determined it needed a $90,000 allowance for 2011 to cover expected uncollectible accounts.

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Amit Pandey
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376 views1 page

Wilcox Mills Accounts Receivable Analysis

Wilcox Mills is a manufacturer that sells products on 30-day credit terms and had $30 million in annual sales in 2010. At the end of 2010, the company reported $3.1 million in accounts receivable and $80,000 in allowance for doubtful accounts. In 2011, $165,000 in specific accounts receivable were written off as uncollectible, though $15,000 of those were later collected. Based on an aging of accounts, the company determined it needed a $90,000 allowance for 2011 to cover expected uncollectible accounts.

Uploaded by

Amit Pandey
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Wilcox Mills is a manufacturer that makes all sales on

Wilcox Mills is a manufacturer that makes all sales on 30-day credit terms. Annual sales are
approximately $30 million. At the end of 2010, accounts receivable were presented in the
company’s balance sheet as follows:Accounts receivable from clients . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . $3,100,000Less: Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . 80,000During 2011, $165,000 of specific accounts receivable were written off
as uncollectible. Of these accounts written off, receivables totaling $15,000 were subsequently
collected. At the end of 2011, an aging of accounts receivable indicated a need for a $90,000
allowance to cover possible failure to collect the accounts currently outstanding. Wilcox Mills
makes adjusting entries for uncollectible accounts only at year-end.Instructionsa. Prepare the
following general journal entries:1. One entry to summarize all accounts written off against the
Allowance for Doubtful Accounts during 2011.2. Entries to record the $15,000 in accounts
receivable that were subsequently collected.3. The adjusting entry required at December 31,
2011, to increase the Allowance for Doubtful Accounts to $90,000.b. Notice that the Allowance
for Doubtful Accounts was only $80,000 at the end of 2010, but uncollectible accounts during
2011 totaled $150,000 ($165,000 less the $15,000 reinstated).Do these relationships appear
reasonable, or was the Allowance for Doubtful Accounts greatly understated at the end of
2010? Explain.View Solution:
Wilcox Mills is a manufacturer that makes all sales on
SOLUTION-- http://solutiondone.online/downloads/wilcox-mills-is-a-manufacturer-that-makes-all-
sales-on/

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