Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2018, accounts receivabletotaled $625,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $32,000 at the beginning of 2018 and $21,000 in receivables were written off during the year as uncollectible. Also, $1,200 in cash was received in December from a customer whoseaccount previously had been written off. The company estimates bad debts by applying a percentage of 10% toaccounts receivable at the end of the year.Required:1. Prepare journal entries to record the write-off of receivables, the collection of $1,200 for previously writtenoff receivables, and the year-end adjusting entry for bad debt expense.2. How would accounts receivable be shown in the 2018 year-end balance sheet?
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.
Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2018,
totaled $625,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $32,000 at the beginning of 2018 and $21,000 in receivables were written off during the year as uncollectible. Also, $1,200 in cash was received in December from a customer whose
account previously had been written off. The company estimates
accounts receivable at the end of the year.
Required:
1. Prepare
off receivables, and the year-end
2. How would accounts receivable be shown in the 2018 year-end
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
