December 31, 2007, Leis Co

December 31, 2007, Leis Co. reported the following information on its balance sheet. Accounts receivable $960,000 Less: Allowance for doubtful accounts 80,000 During 2008, the company had the following transactions related to receivables. 1. Sales on account $3,200,000 2. Sales returns and allowances 50,000 3. Collections of accounts receivable 2,810,000 4. Write-offs of accounts receivable deemed uncollectible 90,000 5. Recovery of bad debts previously written off as uncollectible 24,00 Compute the accounts receivable turnover ratio for 2008(a)1.Accounts Receivable

3,200,000

Sales

3,200,000

2.Sales Returns and Allowances

50,000

Accounts Receivable

50,000

3.Cash

2,810,000

Accounts Receivable

2,810,000

4.Allowance for Doubtful Accounts

90,000

Accounts Receivable

90,000

5.Accounts Receivable

24,000

Allowance for Doubtful Accounts

24,000

Cash

24,000

Accounts Receivable

24,000

(b)

Accounts ReceivableAllowance for Doubtful Accounts

Bal. 960,000

(1)3,200,000

(5) 24,000(2) 50,000

(3)2,810,000

(4) 90,000

(5) 24,000(4)90,000Bal.80,000

(5)24,000

Bal.1,210,000Bal.14,000

(c)Balance before adjustment [see (b)]

$ 14,000

Balance needed

115,000

Adjustment required

$101,000

The journal entry would therefore be as follows:

Bad Debts Expense

101,000

Allowance for Doubtful Accounts

101,000

(d)

=

= 3.19 times

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