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PQ7-1 The following summary business activities were recorded in the third year of...

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Accounting

PQ $7 - 1$

The following summary business activities were recorded in the third year of operations for Magenta Inc., a merchandising business in Ontario. Their yearend was December $31,$ Year $3 .$ Record each of the business activities in the expanded accounting equation using account names.

Answer the questions that follow the chart.

Trans. # Description Amount

Opening Balances Accounts receivable, $ $148, 570,$

Allowance for Doubtful Accounts, $ $- 17, 800 .$

$1 .$ Total sales during the year. Terms are n $/ 35 .$ $ $962, 734$

$2 .$ Products are returned by customers due to errors in shipping quantities or type of products. $ $35, 621$

$3 .$ Cash collections of accounts receivable. $ $914, 594$

$4 .$ Write off of accounts receivables that are determined to be uncollectable.

$ $24, 158$

$5 .$ Two customers who were previously written off send in a cheque. $ $7, 525$

$6 .$ The business estimates the uncollectable accounts receivable using the aging schedule, provided below.

$-$

Category Amount Estimated Uncollectable Estimated Allowance for Doubtful Accounts

Current $60, 500 1 %$

$1 - 30$ days overdue $34, 740 5 %$

$31 - 60$ days overdue $19, 600 16 %$

$61 - 90$ days overdue $14, 850 30 %$

Over $90$ days overdue $7, 240 55 %$

Total $136, 930$

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