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

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

Short answer

Answer

The amount of allowance for the doubtful account will be $990,500.

Step-by-step solution

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

When the goods are sold, but the payment against this will be received after some days, then this sales process is known as credit sales

Representation of the amount

Balance Sheet
Assets	Amount($)
Current assets
Accounts receivables	1,025,000
Less: Allowance for doubtful accounts	34,500
	990,500

Notes to accounts

$$\begin{gathered} Allowancefordoubtfulaccounts=Accountsreceivables\times Percentageofestimateduncollectible \\ =\$575,000\times \frac{6}{100} \\ =\$34,500 \end{gathered}$$