sume th $900,00o 400, 000 70,000 3,000 3, 500 e following events for the year zu
ID: 2545704 • Letter: S
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sume th $900,00o 400, 000 70,000 3,000 3, 500 e following events for the year zui. 1. Credit sales 2. Cash sales 5Accounts receivable balance 1/1/11 4Accounts written off during the year were 1/11 Allowance for Uncollectibles balance Seventy percent (70%) of th collected during the year. 6. is year's credit sales are Required Scenario One Use the above data set. Assume that the company estimat annual bad debt expense at 3% of total sales. Compu the Bad Debt Expense and provide the journal entry to show its recognition 2. Provide the journal entry showing the write-off of bad debts. 3. Show the balance sheet presentation of net accounts receivable. Scenario TwO Use the above data set. Ignore Scenario One Assume that the company estimates that 5% of its accounts receivable will not get collected. 1. Compute the Bad Debt Expense and provide the journal entry 2. Provide the journal entry showing the write-off of bad 3. Show the balance sheet presentation of net accounts to show its recognition. debts. receivable.Explanation / Answer
Scenario One: 1: Bad Debt expense = 900000*3%-(3500-3000)=$26500 Journal entries: Debit Bad Debt 26500 Credit Allowance for uncollectibles 26500 2: Journal Entries: Debit Allowance for uncollectibles 3000 Credit Accounts Receivables 3000 3: Balance Sheet presentation: Assets abstract: Current Assets: Accounts Receivable=70000-3000+270000=337000 Less: Allowance for Uncollectibles balance= 27000 Net Accounts Receivables = 310000 Scenario Two: 1: Bad Debt expense = (900000*30%+70000-3000)*5%-500=$16850-500=16350 Journal entries: Debit Bad Debt 16350 Credit Allowance for uncollectibles 16350 2: Journal Entries: Debit Allowance for uncollectibles 3000 Credit Accounts Receivables 3000 3: Balance Sheet presentation: Assets abstract: Current Assets: Accounts Receivable=70000-3000+270000=337000 Less: Allowance for Uncollectibles balance= 16850 Net Accounts Receivables = 320150
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