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aaaaa bonded company reported the following on its 12/31/2017 financial statements: Accounts Receivable (net of a...

aaaaa bonded company reported the following on its 12/31/2017 financial statements:

Accounts Receivable (net of a $16,000 Allowance) of $104,000

Consider that during 2018 Layer Cake accrued bad debt at 3% of credit sales, reported actual customer write offs of $21,000, credit sales of $800,000, and cash collections from customers as payment on account of $789,000. Additionally, the controller determined (from a detailed 12/31 aging analysis) that it would be appropriate to report the receivables on the 12/31/2018 balance sheet at a net realizable value of $88,000. What value will Layer Cake report as bad debt expense for the twelve months ended at 12/31/2018?

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Expert Solution

Accounts Receivable Allowance for Uncollectible Net
Beginning Balance                     120,000                       16,000                     104,000
Credit sales                     800,000
Bad debt (Accrued)                       24,000 (3% of 800000)
Cash Collection                  (789,000)
Write offs                     (21,000)                     (21,000)
More Bad debt expense due to ageing                         3,000 (Balancing Figure)
Ending Balance                     110,000                       22,000                       88,000
Total Bad debt Expense                       27,000 (3000 + 24000)

ekkarill92 answered 1 year ago
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