Question

Pogo Corporation sells merchandise only on credit. For the year ended December 31, 2020, the following data is available: $3,200,000 300,000 (DR) 30,000 (CR) 3,160,000 24,000 Sales Accounts receivable, 1/1/20 Allowance for doubtful accounts, 1/1/20 Collections of accounts receivable in 2020 Accounts written off as uncollectible in 2020 1. What is Pogo's balance in the Accounts Receivable account at December 31, 2020? 2. What entry should Pogo make to writeoff the $24,000 of uncollectible accounts during 2020? (One aggregate entry) 3. What is Pogo's balance in the Allowance for Doubtful Accounts at December 31, 2020 before any adjustments, but after the writeoffs? 4. Pogo estimates that 10% of the December 31, 2020 accounts receivable will ultimately be uncollectible, what adjusting journal entry should Pogo make on December 31, 2020?

Answer 1

Requirement 1 Accounts receivable beginning balance Add: Sales on account Less: Collection on account Less: Write off Accounts receivable ending bal. 300,000 3,200,000 -3,160,000 -24,000 316,000 Balance in accounts receivable account at Dec. 31, 2020 is 316,000 Credit Requirement 2 Date Account title 2020 Allowance for doubtful accounts Accounts receivable Debit 24,000 24,000 Requirement 3 Allowance for doubtful accounts, 1/1/20 Less: Write off Allowance for doubtful accounts, before adjustment (credit balance) 30,000 -24,000 6,000 Balance in Allowance for doubtful accounts at Dec. 31, 2020 is 6,000. Credit Requirement 4 Date Account title 2020 Bad debt expense (316,000x10%)-6,000 Allowance for doubtful accounts Debit 25,600 25,600

Requirement5 Balance sheet partial Current assets: Accounts receivable (gross) Less: Allowance for doubftul accounts 316,000 -31,600 284,400 Accounts receivable (net) Requirement 6 Date Credit Debit 4,000 Account title Accounts receivable Allowance for doubtful accounts (To reinstate the written off) 4,000 4,000 Cash Accounts receivable (To record the collection) 4,000