In: Accounting
Soccer Inc. had credit sales of $775,000 during 2020. At the end of 2020, the unadjusted ending balance in Soccer’s Allowance for Bad Debt account was $7,600, and the unadjusted balance in its gross accounts receivable account was $239,000. Soccer uses the percent of sales method to determine bad debt expense. Based on historical data, Soccer assumes that 1.163% of credit sales will prove to be uncollectible. Additionally, the company has a policy of writing-off any Account Receivable which is outstanding more than 75 days. As of 12/31/20, Soccer has Accounts Receivable balances totaling $2,000 outstanding over 75 days which need to be written off.
**You may round your answers to the nearest dollar.
(A) What journal entry would Soccer record to "Write-Off" Accounts Receivable?
(B) What journal entry would Soccer record to recognize 2020 Bad Debt Expense?
(C) What is the adjusted 12/31/2020 balance of Soccer's Gross Accounts Receivable? *(Show each calculation)
(D) What is the adjusted 12/31/2020 balance of Soccer's Allowance for Bad Debt? *(Show each calculation)
(E) What is the adjusted 12/31/2020 balance of Soccer's Net Accounts Receivable? *(Show each calculation)
Transaction | Account Titles and Explanations | Debit | Credit |
A | Allowance for Bad Debt | $ 2,000 | |
Accounts Receivable | $ 2,000 | ||
B | Baddebt expenses ($775,000*1.163%) | $ 9,013 | |
Allowance for Bad Debt | $ 9,013 |
C.
Unadjusted Gross Accounts Receivable | $ 239,000 |
Less: Written off | $ (2,000) |
Adjusted Gross Accounts Receivable | $ 237,000 |
D.
Unadjusted Allowance for Bad Debt account | $ 7,600 |
Less: Written off | $ (2,000) |
Adjusted Allowance for Bad Debt account | $ 5,600 |
E.
Adjusted Gross Accounts Receivable | $ 237,000 |
Adjusted Allowance for Bad Debt account | $ (5,600) |
Net Accounts Receivable | $ 231,400 |
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