Question

Johnson Company calculates its allowance for uncollectible accounts as 20% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of $20,000 at the beginning of 2021. No previously written-off accounts receivable were reinstated during 2021. At 12/31/2021, gross accounts receivable totaled $333,500, and prior to recording the adjusting entry to recognize bad debts expense for 2021, the allowance for uncollectible accounts had a debit balance of 36,600.

Required:
1. What was the balance in gross accounts receivable as of 12/31/2020?

Answer 1

The bank's balance sheet includes assets of $620 and liabilities of $400, resulting in a net worth of $220.

Step-by-step explanation:

• Assets:
  • Reserves: $50
  • Government Bonds: $70
  • Loans: $500
• Liabilities:
  • Deposits: $400

Net Worth = Assets - Liabilities

Net Worth = ($50 + $70 + $500) - $400

Net Worth = $620 - $400

Net Worth = $220