Question

During Burns Company's first year of operations, credit sales totaled $166,000 and collections on credit sales totaled $118,000. Burns estimates that bad debt losses will be 2.0% of credit sales. By year-end, Burns had written off $430 of specific accounts as uncollectible. Required: 1. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense. 2. Show the year-end balance sheet presentation for accounts receivable.

Answer 1

1. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense.

1

Db Bad debt expense_______ 3320

Cr Allowance for bad debt_________________ 3320

2

Db Allowance for bad debt__ 430

Cr Account Recevaible_____________________ 430

2. Show the year-end balance sheet presentation for accounts receivable.

Account receivable__________47570

Net account receivable_______44250

Step-by-step explanation:

Credit sales 166000

Credir sales 118000

Bad debt losses 2%

Writte off 430

Allowance 3320

1

Db Bad debt expense_______ 3320

Cr Allowance for bad debt_________________ 3320

2

Db Allowance for bad debt__ 430

Cr Account Recevaible_____________________ 430

Year end balance___________48000

Cr Account Recevaible_________430

Account receivable__________47570

Allownace for bad debts_______3320

Net account receivable_______44250