Question

During its first year of operations, Indigo Corporation had credit sales of $3,213,200, of which $361,300 remained uncollected at year-end. The credit manager estimates that $16,880 of these receivables will become uncollectible. Prepare the journal entry to record the estimated uncollectibles. (Assume an unadjusted balance of zero in Allowance for Doubtful Accounts.) (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit LINK TO TEXTLINK TO TEXT INTERACTIVE TUTORIAL INTERACTIVE TUTORIAL Prepare the current assets section of the balance sheet for Indigo Corporation, assuming that in addition to the receivables it has cash of $91,990, merchandise inventory of $189,180, and supplies of $12,580. (List current assets in order of liquidity)

Answer 1

Answer and Explanation:

The journal entry is given below;

Bad debts expense $16,880

To Allowance for doubtful accounts $16,880

(Being the bad debt expense is recorded)

The preparation of the current asset section of the balance sheet is presented below:

Cash $91,990

Accounts receivable $361,300

less:allowance for doubtful accounts-$16,880 $344,420

Merchandise inventory $189,180

Supplies $12,580

total current assets $638,170