Business, 12.03.2021 16:00 iliketurtures

The following transactions occurred over the months of September to December at Nicoleâ€™s Getaway Spa (NGS). September
Sold spa merchandise to Ashley Welch Beauty for $1,600 on account; the cost of these goods to NGS was $820.

October
Sold merchandise to Kelly Fast Nail Gallery for $370 on account; the cost of these goods to NGS was $160.

November
Sold merchandise to Raea Gooding Wellness for $220 on account; the cost of these goods to NGS was $150.

December
Received $1,080 from Ashley Welch Beauty for payment on its account.

Required:
1.
Prepare journal entries for each of the transactions. Assume a perpetual inventory system. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

2. Estimate the Allowance for Doubtful Accounts required at December 31, assuming the only receivables outstanding at December 31 arise from the transactions listed above. NGS uses the aging of accounts receivable method with the following uncollectible rates: one month, 1%; two months, 5%; three months, 20%; more than three months, 40%.

3. The Allowance for Doubtful Accounts balance was $43 (credit) before the end-of-period adjusting entry is made. Prepare the journal entry to account for the Bad Debt Expense. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

4.
Assume the end of the previous year showed net accounts receivable of $760, and net sales for the current year are $8,600. Calculate the accounts receivable turnover ratio. (Do not round intermediate calculations. Round your answer to 1 decimal place.)

5.
Audreyâ€™s Mineral Spa has an accounts receivable turnover ratio of 8.0 times. How does NGS compare to this competitor?

Answers: 2

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The following transactions occurred over the months of September to December at Nicoleâ€™s Getaway S...