Question

During Burns Company's first year of operations, credit sales totaled $166,000 and collections on credit sales totaled $118,000. Burns estimates that bad debt losses will be 2.0% of credit sales. By year-end, Burns had written off $430 of specific accounts as uncollectible Required: 1. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense. 2. Show the year-end balance sheet presentation for accounts receivable. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense. (If no e.

Answer 1

Answers

• Requirement 1

Transaction	Accounts title	Debit	Credit
1	Allowance for Doubtful Accounts	$430
	Accounts receivables		$430
	( to record write offs)
2	Bad Debt Expense ($166000 credit sale x 2%)	$3,320
	Allowance for Doubtful Accounts		$3,320
	(to record bad debt expense)

• Requirement 2

Balance Sheet Partial
Current Assets:
Accounts receivables [166000 - 118000 - 430]	$47,570
Less: Allowance for Doubtful Accounts (3320 - 430)	$2,890
Accounts receivables, net realizable value	$44,680