Additional Exercise 203 Avett Furniture Store has credit sales or $400,000 in 20

Question

Additional Exercise 203 Avett Furniture Store has credit sales or $400,000 in 2015 and a debit balance of $600 in the Allowance for Doubtful Accounts at year end. As of December 31, 2015, $130,000 of accounts receivable remain uncollected. The credit manager prepared an aging schedule or accounts receivable and estimates that $7,000 will prove to be uncollectible On March 4, 2016, the credit manager authorizes a write-off of the $1,200 balance owed by B. Fernitti. Prepare the adjusting entry to record the estimated uncollectible accounts expense in 2015. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Bad Debt Expense Debit Credit 7600 Allowance for Doubtful 7600 Show the balance sheet presentation of accounts receivable on December 31, 2015. Avett Furniture Store Balance Sheet Accounts Receivable 130000 Less : Allowance for Doubtful Acc 7000 123000

Explanation / Answer

1 Bad debts expense 7600 =7000+600        Allowance for doubtful accounts 7600 Accounts receivable 130000 Less : Allowance for doubtful accounts 7000 123000 2 Allowance for doubtful accounts 1200         Accounts receivable 1200 Before write-off After write-off Accounts receivable 160000 158800 Less : Allowance for doubtful accounts 3000 1800 Cash realizable value 157000 157000

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