Question

Swathurnore Clothing Corporation grants its customers 30 days credit. The company uses the allowance method for its uncollectible accounts receivable During the year a monthly bad debt accrual is made by multiplying 3% tres the amount of credit sales for the month. At the fiscal year end of December 31 an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly. At the end of 2017, accounts receivable were $574,000 and the allowance account had a credit balance of $54.000 Accounts receivable activity for 2018 was as follows: 5 574.000 Beginning balance Credit sales Collections Write-offs Ending balance 2,020, (2.481,00 The company's controller prepared the following aging summary of year-end accounts receivable Arountercent Uncollectie days $430.00 61-90 days 91 120 days 0,000 - Total d the Required 1. Prepare a summary journal entry to record the monthly bad debt col 2. Prepare the necessary year-end adjusting entry for bad debit expense 3. What is total boddeot expense for 2018? 3-5. How would accounts receivable appear in the 2018

I'm interested in knowing how to arrive at the answer for section 3-b in this problem.

I get to the end and seem to be 30,000 shy of completion when I take 643,000 minus allowance for bad debts of 68,900. Could you show how 643,000 goes to 673,000?

Answer 1

3b Dr CR Accounts receivable 574,000 Cash Beginning Bal. 2,483,000 Allowance for 2,620,000 doubtful accounts Credit sales 68,000 -Write off Ending Bal. 643,000 $ 3,194,000 3,194,000 Allowance for doubtful accounts CR Dr Accounts receivable 68,000 Beginning Bal. 54,000 Bad Debt expense -Write off 68,900 -provision created Ending Bal. 54,900 122,900 122,900 Allowance for Percent Amount uncollectable doubtful accounts 4% 430,000 17,200 15% 98,000 14,700 25% 60,000 15,000 40% 55,000 22,000 643,000 68,900 Accounts receivable 643000 Less: Allowance for doubtful accounts 54900 $ Net Accounts receivable 588,100 This will appear on the balance sheet