Question

Caloga Produce estimates bad debt expense at 40% of credits The company reported accounts we and allowance for uncoctible accounts of During 20m Calestogut credt sales and collections were sin000 and $398 000, respectively and s1910 in accounts receivable were written oft 1000 and 590 o vely December 2012 Calistog's accounts receivable at December 2016 ο Ο μειο ο Ο διειοο ο ο Ο κό

Answer 1

1. Let us calculate the bad debts expense for the current period, which comes to 0.4% of credit sales that is 333000*0.4%= 1332.
2. Closing accounts receivable is calculated by using the formula, opening accounts receivable + credit sales - receipts during the year - bad debts written off.
3. Here the assumption is that the written off balance of 1910 on account of bad debts is including the estimated bad debts of 1332 calculated in step - 1.
4. So the closing accounts receivable balance will be 483000 + 333000 - 318000 - 1910 = 496090.
5. More over creation of provision for bad debts don't effect the balance of accounts receivable, so the amount of 1590 given in question is not considered.