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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.

Respuesta :

Bad Debt Expense for 2018 is 85,080. In 2018 journal Account Receivable(net)  would appear as 587,920.

The journal entry is as follows-

Bad debt expense                                  80,400

Allowance for uncollectible accounts      80,400

Allowance for uncollectible accounts    45,000

Accounts receivable                               45,00

2.

Bad debt expense 4,680

Allowance for uncollectible accounts 4,680

3a.

Bad Debt Expense  for 2018 = 85,080

3b. In 2018 journal-

Account Receivable(net) . 587,920

Here is the complete question-

At the end of 2017, accounts receivable were $586,000 and the allowance account had a credit balance of $50,000. Accounts receivable activity for 2018 was as follows:

Beginning balance $ 586,000

Credit sales 2,680,000

Collections (2,543,000 )

Write-offs (45,000 )

Ending balance $ 678,000

Summary

Age Group Amount Percent Uncollectible

0-60 days $ 400,000 4 %

61-90 days 95,000 15

91-120 days 55,000 25

Over 120 days 128,000 36

Total $ 678,000

Required:

1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year.

2. Prepare the necessary year-end adjusting entry for bad debt expense.

3-a. What is total bad debt expense for 2018?

3-b. How would accounts receivable appear in the 2018 balance sheet?

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