During the current year, Bob's Ceramics Shop had sales revenue of $161,000, of which $69,000 was on credit. At the start of the current year, Accounts Receivable showed a $19,000 debit balance and the Allowance for Doubtful Accounts showed a $1,200 credit balance. Collections of accounts receivable during the current year amounted to $55,000. Data during the current year follow: a. On December 31, an Account Receivable (Toby's Gift Shop) of $1,500 from a prior year was determined to be uncollectible; therefore, it was written off immediately as a bad debt. b. On December 31, on the basis of experience, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2.0 percent of credit sales for the year. Required: 1. Prepare the required journal entries for the two items on December 31, the end of the accounting period. 2. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the income statement and balance sheet for the current year. Disregard income tax considerations.

During the current year, Bob's Ceramics Shop had sales revenue of $161,000, of which $69,000 was on credit. At the start of the current year, Accounts Receivable showed a $19,000 debit balance and the Allowance for Doubtful Accounts showed a $1,200 credit balance. Collections of accounts receivable during the current year amounted to $55,000. Data during the current year follow: a. On December 31, an Account Receivable (Toby's Gift Shop) of $1,500 from a prior year was determined to be uncollectible; therefore, it was written off immediately as a bad debt. b. On December 31, on the basis of experience, a decision was made to continue the accounting policy of basing estimated bad debt losses on 2.0 percent of credit sales for the year. Required: 1. Prepare the required journal entries for the two items on December 31, the end of the accounting period. 2. Show how the amounts related to Accounts Receivable and Bad Debt Expense would be reported on the income statement and balance sheet for the current year. Disregard income tax considerations.

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter9: Receivables

Section: Chapter Questions

Problem 17E: Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of...

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