1)Identify the amount of bad debts expense that Klum Runway Projects Company rep
ID: 2535889 • Letter: 1
Question
1)Identify the amount of bad debts expense that Klum Runway Projects Company reported in its income statement for the year ended December 31, 2017: (2 points)
2) Provide the proper presentation of accounts receivable in the GAAP balance sheet of Klum Runway Projects Company at December 31, 2017 including the appropriate description and the amount reported: (2 points)
Part #2: Klum Runway Projects Company (10 points) Klum Runway Projects Company uses the allowance method to record bad debts expense and estimates that 1.40% of net sales will be uncollectible. The following information was gathered from the accounting records at December 31, 2017 PRIOR to the recording of the year-end adjustment for bad debts: (??? Cr- Dr. $240,000 $15,790 $15,620,000 Sales on credit Sales returns Accounts receivable Allowance for doubtful accounts $3,675,000 a. Prepare the adjusting entry required to record the provision for bad debts. (4 points) DATE ACCOUNT NAMES DEBIT CREDIT Supporting Computation Required:Explanation / Answer
Answers
Sales on credit
$ 156,20,000.00
Sales Return
$ (2,40,000.00)
Net Sales
$ 153,80,000.00
Bad Debt Expenses (1.4% of net sales) = 15380000 x 1.4%
$ 2,15,320.00
Date
Account Names
Debit
Credit
31-Dec-17
Bad Debt Expense
$ 2,15,320.00
Allowance for Doubtful Accounts
$ 2,15,320.00
(bad debt expense recorded)
Working
Allowances for Doubtful Debts
Unadjusted Balance - Credit (Debit)
$ (15,790.00)
Add: Bad Debt expense
$ 2,15,320.00
Adjusted balance - Credit (Debit)
$ 1,99,530.00
Balance Sheet presentation (Partial)
ASSETS
Current Assets:
Accounts receivables
$ 36,75,000.00
Less: Allowances for Doubtful Accounts
$ 1,99,530.00
Accounts receivables, net
$ 34,75,470.00
Sales on credit
$ 156,20,000.00
Sales Return
$ (2,40,000.00)
Net Sales
$ 153,80,000.00
Bad Debt Expenses (1.4% of net sales) = 15380000 x 1.4%
$ 2,15,320.00
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