Soccer Inc. had credit sales of $775,000 during 2020. At the end of 2020, the unadjusted...

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?

(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)

Solutions

Expert Solution

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

Unadjusted Gross Accounts Receivable	$ 239,000
Less: Written off	$ (2,000)
Adjusted Gross Accounts Receivable	$ 237,000

Unadjusted Allowance for Bad Debt account	$ 7,600
Less: Written off	$ (2,000)
Adjusted Allowance for Bad Debt account	$ 5,600

Adjusted Gross Accounts Receivable	$ 237,000
Adjusted Allowance for Bad Debt account	$ (5,600)
Net Accounts Receivable	$ 231,400

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ekkarill92 answered 1 year ago

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