During the year ended December 31, 2015, Kelly’s Camera Shop had sales revenue o
ID: 2543262 • Letter: D
Question
During the year ended December 31, 2015, Kelly’s Camera Shop had sales revenue of $165,000, of which $82,500 was on credit. At the start of 2015, Accounts Receivable showed a $12,000 debit balance and the Allowance for Doubtful Accounts showed a $590 credit balance. Collections of accounts receivable during 2015 amounted to $67,000. Data during 2015 follow: a. On December 10, a customer balance of $1,450 from a prior year was determined to be uncollectible, so it was written off. b. On December 31, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2 percent of credit sales for the year. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the balance sheet and income statement for 2015.
Explanation / Answer
Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the balance sheet and income statement for 2015.
Income statement will be shown bad debt expense which is 2% of credit sales = 82500*2% = 1650
Balance sheet :
Account receivable (12000+82500-67000-1450) 26050 Less: Allowance for doubtful accounts (590-1450+1650) 790 Net realizable value 25260Related Questions
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