Beryl\'s Wholesale Grocer estimates bad debt expense 1/2% of credit sales. The c

ID: 2507973 • Letter: B

Question

Beryl's Wholesale Grocer estimates bad debt expense 1/2% of credit sales. The company reported these numbers for 2013:

-Accounts Receivable 1/1/13..........................................................................................$71,000

-Allowance for Doubtful Accounts (credit balance) 1/1/13........................................ 1,650

-2013 credit sales............................................................................................................. 315,000

-2013 collections on credit sales................................................................................... 319,000

-Bad debts written off in 2013......................................................................................... 1,720

a. What is the amount of Beryl's bad debt expense for 2013?

b. Prepare the journal entry to record bad debt expense for 2013?

c. What is Beryl's Accounts Receivable balance at 12/31/13?

d. What is the amount of Beryl's Allowance for Doubtful Accounts at 12/31/13?

Hi,

Please find the answers as follows:

Part A:

Beryl's bad debt expense for 2013 = Credit Sales*Bad Debt Expense % = 315000*1/2% = 1575

Part B:

Bad Debts Expense Dr. 1575

Allowance for Doubtful Debts Cr. 1575

Part C:

Balance of A/R at 12/31/13 = 71000 (Opening Balance) + 315000 (Credit Sales) - 319000 (Collections) - 1720 (Bad Debts Written Off) = 65280

Part D:

Beryl's Allowance for Doubtful Accounts at 12/31/13 = 1650 (Opening Balance) + 1575 (Bad Debt Expense During the Year) = 3225

Thanks.

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