Question

Balance Sheet Shaded cells have feedback. Instructions The following information is extracted from Shelton Corporation's accounting records at the beginning of 2019: Accounts Receivable Alowance for Doubtful Accounts $63,000 1,400 (credit) During 2019, sales on credit amounted to $575,000, $557,400 was collected on Outstanding receivables and $2,600 of recolvables were written off as uncollectible. On December 31, 2019. Shelton estimates its bad debts to be 4% of the outstanding gross accounts receivable balance. Required: 1. Prepare the journal entry necessary to record Shion's estimate of bad debt expense for 2019, 2. Prepare the Accounts Receivable section of Shelton's December 31, 2019, balance sheet 3. Compute Shelton's receivables turnover 4. Sheldon uses IFRS, what might be the heading for the accounts receivable section in Requirement

Answer 1

Answer-Journal Entry

Date	Account Title and Explanation	Debit	Credit
	Bad Debt Expenses	4,320
	Allowance for doubtful account		4,320
	($63,000+$575,000-$557,400-$2,600)*0.04-$1,400+$2,600

2-Shelton Corporation

Partial Balance Sheet

As at December 31,2019

Accounts Receivable ($63,000+$575,000-$557,400-$2,600)	$78,000
Allowance for doubtful account ($78,000*4%)	$3,120
Net accounts receivable	$81,120

3-Accounts Receivable Turnover= Credit sales/ Average account receivable

=$575,000/ [($63,000-$1,400+$81,120)/2]

=8.06

4-Current Assets heading can be used if Shelton uses IFRS.