Question

During Burns Company's first year of operations, credit sales totaled $168,000 and collections on credit sales totaled $119,000. Burns estimates that bad debt losses will be 1.0% of credit sales. By year-end, Burns had written off $440 of specific accounts as uncollectible. Required: 1. Please help me prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense. 2. I have too Show the year-end balance sheet presentation for accounts receivable. Thanks!

Answer 1

Notes: 1	CALCULATION OF BAD DEBT EXPENSES ON THE BASIS OF % OF CREDIT SALES
	Account Receivable	$                 1,68,000
	Estimated that 1% of $ 168,000 will be uncollectable	$                       1,680
Solution:1
Date	Particulars	Debit	Credit
-----	Bad Debts Expenses account	$1,680
	Allowance for Doubtful Debts		$1,680
	(Record the alloawance for doubtfull accounts)
-----	Allowance for Doubtful Debts	$440
	Account Receivable		$440
	(Write off the uncollectable amount )
Solution:2
	Balance Sheet Presentation of Account Receivable
	Balance in Account Receivable ($ 168,000 - $ 119,000)	$49,000
	Less: Allwance for doubtful debts ($ 1680 - $ 440)	$1,240
	Net Balance of Account Receiable	$47,760