In: Accounting
on january 2, 2026, kingbird corporation started the year with a balance in accounts receivables of $147,000 and a credit balance in allowance for doubtful accounts of $8,100. during 2026, the company had total sales of $675,000. 80% of these sales were credit sales. collections [not including the cash sales] during the period were $570,000. kingbird wrote off as uncollectible accounts receivables of $8,700. in addition, an account of $810 that was previously written off an uncollectible was recovered during the year. uncollectible accounts are estimated to be 5% of the end-of-year accounts receivable balance. [please omit cost of goods sold entries]
[a] determine the ending balance in accounts receivables
[b] determine the ending balance in allowance for doubtful accounts
[c] prepare the entry to record bad debt expense for the period
a)
ending balance in accounts receivables = beginning balance in accounts receivables + credit sales -Cash collection - written off
ending balance in accounts receivables = 147,000 + (80%*675,000) - 570,000 - 8,700
ending balance in accounts receivables = 108,300
b)
ending balance in allowance for doubtful accounts = beginning balance in allowance for doubtful accounts-written off +reinstated receivables
ending balance in allowance for doubtful accounts = 8,100 - 8,700 + 810
ending balance in allowance for doubtful accounts = 210
c)
bad debt expense for the period = estimated uncollectible - ending balance in allowance for doubtful accounts
bad debt expense for the period = (108,000*5%)-210
bad debt expense for the period = 5,205
journal entry:
Accounts | debit | credit |
Bad debt expense | 5,205 | |
Allowance for doubtful accounts | 5,205 |
$5205