Swathmore Clothing Corporation grants its customers 30 days\' credit. The compan
ID: 2491311 • Letter: S
Question
Swathmore Clothing Corporation grants its customers 30 days' credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 2% times the amount of credit sales for the month. At the fiscal year-end of December 31. an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly. At the end of 2012, accounts receivable were $604,000 and the allowance account had a credit balance of $68,000. Accounts receivable activity for 2013 was as follows: The company's controller prepared the following aging summary of year-end accounts receivable: Required: Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year. (If no entry is required for a particular event, select "No journal entry required" in the first account field.)Explanation / Answer
Solution:
Monthly bad debt expense accrual summary:
Bad debt expense = 2,770,000 * 2% = 55,400
To record year 2013 accounts receivable write offs:
General Journal Debit Credit Bad debt expense 55,400 Allowance for uncollectible accounts 55,400Related Questions
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