Raintree Cosmetic Company sells its products to customers on a credit basis. An

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Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2017 balance sheet disclosed the following Current assets: Receivables, net of allowance for uncollectible accounts of $50,880 $532,000 During 2018, credit sales were $1,850,000, cash collections from customers $1,930,000, and $59,000 in accounts receivable were written off. In addition, $5,000 was collected from a customer whose account was written off in 2017. An aging of accounts receivable at December 31, 2018, reveals the following Percentage of Year-End Receivables in Group Percent Uncollectible Age Group 4% 18 ?? 50 0-60 days 61-90 days 15 15 91-120 days Over 12e days Required: 1, Prepare summary journal entries to account for the 2018 write-offs ?nd the collection of the receivable previously written off 2. Prepare the year-end adjusting entry for bad debts according to each of the following situations: : a. Bad debt expense is estimated to be 3% of credit sales for the year b. Bad debt expense is estimated by computing net realizable value of the recelvables. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable c. Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is determined by an aging of accounts receivable 3. For situations (a)-(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2018 balance sheet? Complete this question by entering your answers in the tabs below

Explanation / Answer

1) Journal entries Accouting titles & Explanations Debit Credit Allowance for uncollectible accounts 59,000 Account receivable 59,000 Account receivbale 5,000 allowance for uncollectible accouts 5,000 cash a 5,000 Account receivable 5,000 2) Journal entries Accouting titles & Explanations Debit Credit a) Bad debts expense 55500 Allowance for uncollectible accounts 55,500 (1,850,000*3%) b) Bad debts expense 48300 Allowance for uncollectible accounts 48,300 (443000*10%+4000) T-account Account receivable Allowance for uncollectible openint 582000 Cash 1,930,000 written off 59,000 opening 50,000 Sales 1,850,000 writtehn off 59,000 reinstated 5,000 restated 5,000 collected 5,000 bal 4,000 End bal 443,000 c) Bad debts expense 39883 Allowance for uncollectible accounts 39,883 (35883+4000) Age grouo % 0--60 287950 4% 11518 61--90 66450 10% 6645 91----120 66450 10% 6645 over 120 22150 50% 11075 35883 3) net account receivable reported a 391500 b 398700 c 407117

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