Question

1.

• The balance sheet at the end of 2018 reported Accounts Receivable of $785,500 and Allowance for Doubtful Accounts of $11,783 (credit balance).
• The company’s total sales during 2019 were $8,350,200. Of these, $1,252,530 were cash sales the rest were credit sales.
• By the end of the year, the company had collected $6,291,700 of accounts receivable.
• It also wrote off an account for $10,380.

A.Prepare the journal entry for sales.

B. Prepare the journal entry for collections.

C. Prepare the journal entry for write-offs.

D. Post the beginning balance and the journal entries to the T-account for Accounts Receivable. Calculate the balance after these entries have been posted.

E. Post the beginning balance and the journal entries to the T-account Allowance for Doubtful Accounts. Calculate and enter the balance after these entries have been posted.

1.2. December 31, 2019 aging schedule

Age Category	Amount	% Estimated as Uncollectible	$ Estimated as Uncollectible
Current	$1,502,000	0.75%	$11,265
0-90 days past due	64,300	1.5%	965
91-180 days past due	11,719	15%	1,758
Over 180 days past due	3,071	75%	2,303
Total	$1,581,090		$16,291

Given the T-accounts for Accounts Receivable and Allowance for Doubtful Accounts and the aging schedule above, prepare the December 31, 2019 adjusting entry for bad debt.  Show and label any calculation below the journal entry.

A. Enter the amount for Bad Debt Expense and which financial statement it will appear on.

B. Enter the amount for Accounts Receivable and which financial statement it will appear on.

C. Enter the amount for Allowance for Doubtful Accounts and which financial statement it will appear on.

D. Enter the amount for Net realizable value of Accounts Receivable and which financial statement it will appear on.

E. Prepare the December 31, 2019 adjusting entry for bad debt assuming the company uses % of credit sales instead of aging and it estimates that 0.3% of credit sales will be uncollectible. Show and label any calculation below the journal entry.

Answer 1

Solution:

A-C

Journal Entry
Accounts Receivable	7097670
Cash	1252530
Sales Revenue		8350200
(To record cash and credit sales)
Cash	6291700
Accounts Receivable		6291700
(Collection of receivables)
Allowance for Doubful Debts	10380
Accounts Receivables		10380
(to record a debt written off)

D&E

Accounts Receivable
Op. Balance	785500	Cash	6291700
Sales	7097670	Debt Written off	10380
Total	7883170	Total	6302080
Balance	1581090
Allowance for Doubtful Debts
Debt Written off	10380	Op. Balance	11783
Total	10380	Total	11783
		Balance	1403

1.2

Bad Debt Expense	14888
Allowance for Doubtful Accounts		14888
Balance to be maintained in Allowance account	16291
Less: Balance available	1403
Amout to be allocated	14888

A-E

Account	Amount	Financial Statement
Baddebt Expense	14888	Income Statement
Accounts Receivable	1581090	Balance Sheet
Allowance for doubtful Debts	16291	Balance Sheet
Net Realizable Accounts Receivable (1581090-16291)	1564799	Balance Sheet

Bad Debt Expense	21293
Allowance for Doubtful Accounts		21293
Credit Sales	7097670
Bad Debt Estimate (7097670)*.3%	21293

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