Answer:
Grass Frog Company
1. The balance of Accounts Receivable at December 31, 2018 is:
= $410,000.
2. The amount that the company will record as bad debt expense for 2018 is:
= $74,000.
3. Journal Entry to record the bad debt expense for 2018:
Debit Bad Debt Expense $74,000
Credit Allowance for Doubtful Accounts $74,000
To record the bad debt expense for the year.
4. The ending balance in the allowance for doubtful accounts at December 31, 2018 is:
= $24,200
a. Journal Entry to record bad debt expense:
Debit Bad Debt Expense $14,200
Credit Allowance for Doubtful Accounts $14,200
To record the bad debt expense for the year.
b. The net realizable value of the receivables to be reported on the balance sheet at year-end (assuming aging method was used by Grass Frog) is:
Accounts receivable balance $410,000
Allowance for doubtful accounts (24,200)
Net realizable value = $385,800
Step-by-step explanation:
a) Data and Calculations:
December 31, 2018:
Accounts Receivable
January 1, 2018 $305,000
Sales (all on credit) 2,100,000
Cash collections during 2018 (1,980,000)
Accounts written off during 2018 (15,000)
Dec. 31, 2018 balance $410,000
Allowance for doubtful accounts,
Accounts written off during 2018 $15,000
December 31, 2018 (4%) 84,000
January 1, 2018 (credit) (25,000)
Bad Debts Expense 74,000
AGE ANALYSIS:
AGE CLASS % UNCOLLECTIBLE ALLOWANCE
AMOUNT
Not Past Due 1% $220,000 $2,200
1-30 Days Past Due 5% $110,000 5,500
31-60 Days Past Due 10% $40,000 4,000
61-90 Days Past Due 25% $30,000 7,500
Over 90 Days Past Due 50% $10,000 5,000
Total $410,0000 $24,200
Accounts written off during 2018 $15,000
December 31, 2018 24,200
January 1, 2018 (credit) (25,000)
Bad Debts Expense 14,200