Yach Company had the following Account balances on January 1, 2017 Accounts Rece
ID: 2572712 • Letter: Y
Question
Yach Company had the following Account balances on January 1, 2017
Accounts Receivable $220,000 (Dr)
Allowance for doubtful account $ 65,000 (Cr)
Yach Company had the following summary transactions during 2017:
Total Sales for 2017 amounted to $1,500,000. 80% of which were on account.
The Collections during year totaled $1,150,000.
$63,000 were written-off as uncollected during the year.
Yach Company uses the Allowance method for Bad Debt Expense and the bad debt expense is estimated to be 2.5% of all Acc. Receivables.
Required:
Prepare Journal entry to record Yach Company Bad Debt Expense and the Write-offs under the Allowance Method.
Determine the Bad Debt Expense for 2017.
Determine the Net Accounts Receivable balance on December 31, 2017.
Assume after the above entries the Auditor discovered an additional $2,500 should be written off,….no adjustment was made….So…. how will the following items of Yach Company be affected ( i.e. for items below…. Increased, Decreased, No Change) by this?
Bad Debt Expense for 2017.
Accounts Receivable on December 31, 2017.
Net Accounts Receivable on December 31, 2017.
Explanation / Answer
Answers:
Bad Debt Expense for 2017 = $10675
Accounts Receivable on December 31, 2017 = $507000
Net Accounts Receivable on December 31, 2017 = $496325
Working Notes:
Sales = $1500000
Sales on account = $1500000 x 80% = $1200000
Credit balance in allowance for bad debt account after write off of $63000 of accounts receivable
= $65000 - $63000 = $2000
Note : Out of $1150000 collection collection from cash sale is $300000
Journal:
Second Part:
Answer:
Bad Debt Expense for 2017 = $13113
Accounts Receivable on December 31, 2017 = $504500
Net Accounts Receivable on December 31, 2017 = $491387
Working Notes:
Sales = $1500000
Sales on account = $1500000 x 80% = $1200000
Debit balance in allowance for bad debt account after write off of $63000 of accounts receivable
= $65000 - $65500 = $500
Beginning Balance $ 220,000 Add: Sales on account for the year 2017 $ 1,200,000 Total accounts receivable $ 1,420,000 Less: Collection from Acc. Recv. during 2017 ($1150000 - $300000) $ 850,000 Written off during 2017 $ 63000 $ 913,000 Balance $ 507,000 Estimated bad debt expense @2.5% $ 12,675 Less: credit balance in allowance for doubtful debt account $ 2,000 Bad debt expense for the year 2017 $ 10,675Related Questions
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