In: Accounting
Lafayette Corporation is a leading manufacturer of sports
apparel, shoes, and equipment. The company’s 2021 financial
statements contain the following information ($ in
millions):
2021 | 2020 | |
Balance Sheet: Accounts Receivable, net | $3,897 | $3,461 |
Income Statement: Sales Revenue | $34,970 | $32,996 |
A note disclosed that the allowance for doubtful accounts had a
balance of $23 million and $47 million at the end of 2021 and 2020,
respectively. Bad debt expense for 2021 was $44 million. Assume
that all sales are made on a credit basis.
Required
Part 1
2021 | 2020 | |
Accounts receivable, net | $ 3,897 | $ 3,461 |
Add: allowance for uncollectible accounts | $ 23 | $ 47 |
Accounts receivable, gross | $ 3,920 | $ 3,508 |
Part 2
Date | General Journal | Debit | Credit |
2021 | Accounts Receivable | 34,970 | |
Sales Revenue | 34,970 |
Part 3
Date | General Journal | Debit | Credit |
2021 | Bad debt expense | 44 | |
Allowance for doubtful accounts | 44 |
Part 4
1.
Beginning allowance for uncollectible accounts | $ 47 |
Add: bad debts expense | $ 44 |
Less: Ending allowance for uncollectible accounts | $ (23) |
Bad debts write-offs | $ 68 |
2.
Date | General Journal | Debit | Credit |
2021 | Allowance for doubtful accounts | 68 | |
Accounts Receivable | 68 |
Part 5
1.
Beginning Accounts receivable, gross | $ 3,508 |
Add: credit sales of 2021 | $ 34,970 |
Less: Ending Accounts receivable, gross | $ (3,920) |
Less: Bad debts write-offs | $ (68) |
Cash Received from customers | $ 34,490 |
Accounts receivable (Gross) | |||
Event | Debit | Credit | Event |
Beg. Bal | $ 3,508 | ||
Credit Sales | $ 34,970 | $ 34,490 | Cash received |
$ 68 | Bad debts write-offs | ||
End. Bal | $ 3,920 |
2.
Accounts receivable (net) | |
Beginning net accounts receivable | $ 3,461 |
Add: Credit sales of 2021 | $ 34,970 |
Less: Cash received | $ (34,490) |
Add: bad debts expense | $ (44) |
Bad debts write-offs (No impact on net amount) | $ 0 |
Ending net accounts receivable | $ 3,897 |