Solution 1:
Journal Entry 1 - Swathmore clothing corporation | |||
Event | Particulars | Debit | Credit |
1 | Bad debts expense Dr ($2,620,000*3%/12) | $6,550.00 | |
To Allowance for uncollectible accounts | $6,550.00 | ||
(To record monthly accrual for bad debts) | |||
2 | Allowance for uncollectible accounts Dr | $68,000.00 | |
To Accounts receivables | $68,000.00 | ||
(To written of accounts receivables) |
Solution 2:
Computation of Allowance for Uncollectible Accounts | |||
Ageing | Accounts Receivables | % Uncollectible | Required Allowance |
0-60 days | $430,000.00 | 4% | $17,200.00 |
61-90 days | $98,000.00 | 15% | $14,700.00 |
91-120 days | $60,000.00 | 25% | $15,000.00 |
Over 120 days | $55,000.00 | 40% | $22,000.00 |
Total | $643,000.00 | $68,900.00 |
Journal Entry 2 - Swathmore clothing corporation | |||
Event | Particulars | Debit | Credit |
1 | Bad debts Expense Dr [$68,900 - ($54,000 + $78,600 - $68,000)] | $4,300.00 | |
To Allowance for doubtful accounts | $4,300.00 | ||
(To record bad debts expense) |
Solution 3a:
bad debts expense for 2018 = $78,600 + $4,300 = $82,900
Solution 3b:
Balance Sheet | |
Current Assets: | |
Accounts receivables, net ($643,000 - $68,900) | $574,100.00 |
Swathmore Clothing Corporation grants its customers 30 days credit. The company uses the allowance method for...
Swathmore 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 2% times 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 $596,000 and the allowance account had...
Swathmore 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 2% times 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 $614,000 and the allowance account had...
Swathmore 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 2% times the amount of credit sales for 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 $598,000 and the allowance account had a...
Swathmore 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 2% times 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 $594,000 and the allowance account had...
Swathmore 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 2% times 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 2020, accounts receivable were $614,000 and the allowance account had...
Swathmore 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 2% times 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 2020, accounts receivable were $608,000 and the allowance account had...
Swathmore 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 2% times 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 2020, accounts receivable were $588,000 and the allowance account had...
Swathmore 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% times 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 2020, accounts receivable were $578,000 and the allowance account had...
Swathmore 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 2% times 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 2020, accounts receivable were $594,000 and the allowance account had...
6. Swathmore 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 2% times 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 2020, accounts receivable were $604,000 and the allowance account...
> The first journal entry in Solution 1 is incorrect. The $2,620,000 would be multiplied by .03 (or 3%) and the answer would be $78,600. There is no need to divide this number by 12. Bad Debts Expense would be debited by 78,600 and Allowance for Uncollectible Accounts would be credited by 78,600.
Everything else is correct!
rebecca144 Sun, Apr 10, 2022 1:22 PM