Question

At the beginning of the year, accounts receivable were $146,000 and the allowance for bad debts was $11,700. During the year, sales (all on account) were $602,000, cash collections were $582,000, bad debts expense totaled $14,800, and $12,200 of accounts receivable were written off as bad debts.

Required:
Calculate the balances at the end of the year for the Accounts Receivable and Allowance for Bad Debts accounts. (Hint: Use T-accounts to analyze each of these accounts, plug in the amounts that you know, and solve for the ending balances.)
Ending balance
Accounts Receivable
Allowance for Bad Debts

Answer 1

Ending balance Accounts Receivable $153,800 Ending balance Allowance for Bad Debts $14,300

Net Accounts Receivable at end of year $139,500

Step-by-step explanation:

Calculation for the balances at the end of the year for both Accounts Receivable and Allowance for Bad Debts accounts

T ACCOUNT

ACCOUNT RECEIVABLE

DEBIT SIDE

Beginning balance $146,000

Sales on account $602,000

Total $748,000

Ending balance $153,800

($748,000-$594,200)

CREDIT SIDE

Cash collections $582,000

Bad Debts written off $12,200

Total $594,200

T ACCOUNT

ALLOWANCE FOR BAD DEBT

DEBIT SIDE

Bad Debts written off $12,200

Total $12,200

CREDIT SIDE

Beginning balance $11,700

Bad debts expense $14,800

Total $26,500

Ending balance $14,300

($26,500-$12,200)

Calculation for Net Accounts Receivable at end of year:

Net Accounts Receivable at end of year = ($153,800-$14,300)

Net Accounts Receivable at end of year=$139,500

Therefore the Ending balance for Accounts Receivable is $153,800 and Allowance for Bad Debts is $14,300 while the Net Accounts Receivable at end of year is $139,500