Question

At December 31, 2017, Ingleton Company reports the following results for the year:

Cash sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(1,025,000

Credit sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,342,000

In addition, its unadjusted trial balance includes the following items:

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . \)575,000 debit

Allowance for doubtful accounts . . . . . . . . . . . . . 7,500 credit

Required

2. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on its December 31, 2017, balance sheet given the facts in part 1a.

Short answer

Answer

Theallowance for doubtful accounts of $983,950 will report under the current assets section of the balance sheet.

Step-by-step solution

Step-by-Step SolutionStep 1: Meaning of Cash Sales

When the goods are sold and the payment is received at the same time, then this sales process is known as cash sales.

Indication of the amounts in balance sheet

Balance Sheet
Assets	Amount
Current assets
Accounts receivables	$1,025,00
Less: Allowance for doubtful accounts	41,050
	$983,95

Notes to accounts

$$\begin{gathered} Allowancefordoubtfulaccounts=Baddebtexpense+Creditbalanceforallowancefordoubtfulaccounts \\ =\$33,550+57,500 \\ =\$41,050 \end{gathered}$$