Tara Kelly Company has the following balances on Jan 1,2017:
Accounts Receivable $500000
Allowance for Bad Debts $(5200)
During the year Tara had a total of $950000 in Sales on AccountsReceivable. She collected $765000 in Cash Collections for herAccount Receivable customers during 2017 as well. Tara was notifiedthat a customer who owed her $6000 had declared bankruptcy duringthe year.
Tara is trying to decide which Account Receivable Allowance andBad Debt Method works best for her:
a. She determines that %5.5 of her CREDIT sales may beuncollectible (% of Net Sales method)
b. She determines that %8 of her Account Receivable Customerswill not pay her (% of Accounts Receivable Method).
REQUIRED
1. record all transactions listed above for 2017 in thejournal
2. update ledgers
3. prepare journal entry if tara uses % of Net sales method
4. what would be Tara's REALIZABLE value?
5. Prepare the journal entry if tara uses $ of AccountReceivable method
6. What would be Tara's Realizable value?