Fernandez Company had an accounts receivable balance of? $150,000 on December? 31, Year 2 and? $175,000 on December? 31, Year 3. The company wrote off?$40,000 of accounts receivable during Year 3. Sales for the year Year 3 totaled? $600,000, and all sales were on account.
The amount collected from customers on accounts receivable during Year 3? was?
The following are held by YRT Corporation at December? 31, Year? 1:
Cash in checking account
Check from customer dated? 01/31/Year 2
?3-month Certificate of? Deposit, due? 01/15/Year 2
?12-month Certificate of? Deposit, due? 02/28/Year 2
Cash in bond sinking fund account
YRT Corporation classifies investments with original maturities of three months or less as cash equivalents. In its December? 31, Year? 1, balance? sheet, what amount should YRT Corporation report as cash and cash? equivalents?
On its December? 31, Year 2 balance? sheet, Red Rock Candle Company reported accounts receivable of? $855,000, net of an allowance for doubtful accounts of?$45,000. On December? 31, Year? 3, Red? Rock’s balance sheet showed gross accounts receivable of? $922,000 and Red? Rock’s income statement reported sales of?$3,000,000. During the? year, accounts receivable of? $35,000 were written off and? $18,000 were recovered. Based on past? experience, 5% of Red? Rock’s ending accounts receivable are uncollectible. How much should Red Rock report as bad debt expense on its Year 3 income? statement?