(SOLVED) On August 31 2016 Lily Floral Supply had a 145

000
On August 31, 2016, Lily Floral Supply had a $145,000 debit balance in Accounts Receivable
and a $5,800 credit balance in Allowance for Bad Debts. During September, Lily made• Sales
on account, $540,000. Ignore Cost of Goods Sold.• Collections on account, $581,000.• Write-
offs of unco
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had-a-145-000
On August 31, 2016, Lily Floral Supply had a $145,000 debit balance in Accounts Receivable
and a $5,800 credit balance in Allowance for Bad Debts. During September, Lily made• Sales
on account, $540,000. Ignore Cost of Goods Sold.• Collections on account, $581,000.• Write-
offs of uncollectible receivables, $5,000.Requirements1. Journalize all September entries using
the allowance method. Bad debts expense was estimated at 1 % of credit sales. Show all
September activity in Accounts Receivable, Allowance for Bad Debts, and Bad Debts Expense
(post to these T-accounts).2. Using the same facts, assume that Lily used the direct write-off
method to account for uncollectible receivables. Journalize all September entries using the
direct write-off method. Post to Accounts Receivable and Bad Debts Expense, and show their
balances at September 30, 2016.3. What amount of Bad Debts Expense would Lily report on its
September income statement under each of the two methods? Which amount better matches
expense with revenue? Give your reason.4. What amount of net accounts receivable would Lily
report on its September 30,2016, balance sheet under each of the two methods? Which amount
is more realistic? Give your reason.View Solution:
On August 31 2016 Lily Floral Supply had a 145 000
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had-a-145-000

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