Question

9. ABC sold 100,000 of services on 1/1 on account

ABC sold $50,000 of services on 3/1 on account

ABC sold $75,000 of services on 6/1 on account

Allowance for bad debts has a beginning balance of 3,000

The estimated uncollectible rate 1/1 is 10%; 3/1 is 5%; and 6/1 is 1%

Based on this – what amount is shown on the balance sheet and income statement for A/R and bad debt expense?

Answer 1

Answer 1	Accounts receivable	$ 211,750
Answer 2	Bad debt expense	$    10,250
Calculated as
Calculation of bad debt expense to be recorded
Date	Receivable	x	%of Uncollectible	=	Amount of uncollectible
1/1	100000	x	10%	=	$                                 10,000
1/2	50000	x	5%	=	$                                   2,500
1/3	75000	x	1%	=	$                                       750
Total Allowances for doubtful debts					$                                 13,250
Less: Allowances for doubtful as on 1/1					$                                   3,000
Bad debt expense to be recorded					$                                 10,250
Accounts Receivable to be shown in Balance sheet
Accounts Receivable to be shown in Balance sheet				$        225,000
Less: Allowances for doubtful debts				$          13,250
Net Valeu to be shown in Balance sheet				$        211,750

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