Question

The following information relates to Halloran Co.'s accounts receivable for 2018: Accounts receivable balance, 1/1/2018 $ 844,000 Credit sales for 2018 3,470,000 Accounts receivable written off during 2018 54,000 Collections from customers during 2018 3,050,000 Allowance for uncollectible accounts balance, 12/31/2018 205,000 What amount should Halloran report for accounts receivable, before allowances, at December 31, 2018?A. $1,210,000.B. $1,264,000.C. $1,005,000.D. None of these answer choices are correct.

Answer 1

Answer:

The correct option is A.

Explanation:

Let us journalize the effects of the transactions as follows:

Debit Accounts receivable                           $3,470,000

Credit Sales revenue                                    $3,470,000

(To record credit sales during the year)

Debit Allowance for doubtful accounts           $54,000

Credit Accounts receivable                              $54,000

(To write-off accounts receivable)

Debit Cash                                                     $3,050,000

Credit Accounts receivable                          $3,050,000

(To record collections on account)

The net effects of the above journals on Accounts receivable is: $844,000 + $3,470,000 - $54,000 - $3,050,000 = $1,210,000