Question

P7.2 (LO 3) Groupwork (Bad-Debt Reporting) The following are a series of unrelated situations. 1. Halen Company's unadjusted trial balance at December 31, 2020, included the following accounts. Debit Credit Accounts receivable $53,000 Allowance for doubtful accounts 4,000 Net sales $1,200,000 Halen Company estimates its bad debt expense to be 7% of gross accounts receivable. Determine its bad debt expense for 2020. 2. An analysis and aging of Stuart Corp. accounts receivable at December 31, 2020, disclosed the following. Amounts estimated to be uncollectible $ 180,000 Accounts receivable 1,750,000 Allowance for doubtful accounts (per books) 125,000 What is the net amount expected to be collected of Stuart's receivables at December 31, 2020? 3. Shore Co. provides for doubtful accounts based on 4% of gross accounts receivable, The following data are available for 2020. Credit sales during 2020 $4,400,000 Bad debt expense 57,000 Allowance for doubtful accounts 1/1/20 17,000 Collection of accounts written off in prior years (customer credit was reestablished) 8,000 Customer accounts written off as uncollectible during 2020 30,000

Answer 1

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Answer 1
Particulars	Amount $
Accounts Receivable	22,000.00
Uncollectible amount at 7%	1,540.00
Add: Debit balance in the Allowance Accounts	4,000.00
Bad debt expense for 2020	5,540.00
Answer 2
Particulars	Amount $
Accounts Receivable	1,750,000.00
Less: Uncollectible amount	(180,000.00)
Net amount expected to be collected	1,570,000.00
Answer 3
Particulars	Amount $
Balance in the Allowance for doubtful Accounts 1/1/2020	17,000.00
Add: Credit reestablished	8,000.00
Less: Customer account written off	(30,000.00)
Add: Bad Debt expense	57,000.00
Balance in the Allowance for doubtful Accounts 31/12/2020	52,000.00
Answer 4
Particulars	Amount $
Accounts Receivable	950,000.00
Less: Customer account written off	(24,000.00)
Balance in the Accounts Receivable 31/12/2020	926,000.00
Answer 5
Particulars	Amount $
Accounts Receivable	310,000.00
Uncollectible amount at 3%	9,300.00
Add: Debit balance in the Allowance Accounts	14,000.00
Bad debt expense for 2020	23,300.00