Spotted Singer Ltd. sells karaoke machines to businesses and consumers via the Internet. On December 31, 2021, Spotted Singer has an accounts receivable balance of $997,000 and a credit balance in its allowance for doubtful accounts of $24,000. During 2022, Spotted Singer had $2,500,000 of credit sales, collected $1,725,000 of accounts receivable, and had customer defaults of $45,000. At year-end, an aging analysis indicates that $28,000 of Spotted Singer's receivables will be uncollectible. Required: 1. Calculate Spotted Singer's balance in accounts receivable on December 31, 2022, prior to the adjustment. 2. Calculate Spotted Singer's balance in allowance for doubtful accounts on December 31, 2022, prior to the adjustment. 3. Prepare the necessary adjusting entry for 2022.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Aging Method
Spotted Singer Ltd. sells karaoke machines to businesses and consumers via the Internet. On December 31, 2021, Spotted Singer has an accounts receivable balance of $997,000 and a credit balance in its allowance for doubtful accounts of $24,000. During 2022, Spotted Singer had $2,500,000 of credit sales, collected $1,725,000 of accounts receivable, and had customer defaults of $45,000. At year-end, an aging analysis indicates that $28,000 of Spotted Singer's receivables will be uncollectible.
Required:
1. Calculate Spotted Singer's balance in accounts receivable on December 31, 2022, prior to the adjustment.
2. Calculate Spotted Singer's balance in allowance for doubtful accounts on December 31, 2022, prior to the adjustment.
3. Prepare the necessary
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