This problem takes you through the accounting for sales, receivables, and uncollectibles for Ship Fast Corp, the overnight shipper. By selling on credit, the company cannot expect to collect 100% of its accounts receivable. At July 31, 2012, and 2013, respectively, Ship Fast Corp. reported the following on its balance sheet (in millions of dollars):During the year ended July 31, 2013, Ship Fast Corp. earned sales revenue and collected cash from customers. Assume uncollectible-account expense for the year was 5% of service revenue, and Ship Fast wrote off uncollectible receivables. At year-end, Ship Fast ended with the foregoing July 31, 2013, balances.Requirements1. Prepare T-accounts for Accounts Receivable and Allowance for Uncollectible Accounts, and insert the July 31, 2012, balances as given.2. Journalize the following transactions of Ship Fast for the year ended July 31, 2013. (Explanations are not required.)a. Service revenue on account, $32,484 millionb. Collections from customers on account, $30,563 millionc. Uncollectible-account expense, 5% of service revenued. Write-off s of uncollectible accounts receivable, $1,662 million3. Post to the Accounts Receivable and Allowance for Uncollectible Accounts T-accounts.4. Compute the ending balances for Accounts Receivable and Allowance for Uncollectible Accounts and compare your balances to the actual July 31, 2013, amounts. They should be the same.5. Show what Ship Fast should report on its income statement for the year ended July 31,2013.
This problem takes you through the accounting for sales receivables 173368