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Prepare Journal Entries

 
 
beythsh
 
Reply Thu 1 Dec, 2011 12:29 am
The Gadzooks Chip Company offers credit terms to its customers. At the end of 2009, accounts receivable totaled $2,223,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $68,000 at the beginning of 2009 and $46,200 in receivables was written off during the year as uncollectible. No previously written off receivables were collected. The company estimates bad debts by applying a percentage of 3% to accounts receivable at the end of the year.

Required:
1. Prepare journal entries to record the write-off of receivables and the year-end adjusting entry for bad debt expense.
2. How would accounts receivable be shown in the 2009 year-end balance sheet?
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donged
 
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Reply Thu 25 Sep, 2014 12:27 pm
@beythsh,
1.
DR Allowance 46,200 CR Accounts Receivable 46,200
DR Bad Debt Expense 66,690 CR Allowance 66,690

2. Accounts Receivable 2,223,000
Less Allowance for Doubtful Accounts 88,490
Net Accounts Receivable 2,134,510
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