Concept explainers
Estimating and Recording
At December 31, 2020, its annual year-end, the accounts of Sun Systems Inc. show the following.
1. Sales revenue for 2020, $468,000, of which one-sixth was on account.
2. Allowance for doubtful accounts, balance December 31, 2019, $2,340 credit.
3. Accounts receivable, balance December 31, 2020 (prior to any write-offs of uncollectible accounts during 2020), $46,930.
4. Uncollectible accounts to be written off, December 31, 2020, $2,730.
5. Aging schedule at December 31, 2020, showing the following breakdown of total accounts receivable, excluding amounts to be written off.
Status | Amount |
---|---|
Not past due | Remainder |
Past due 1–60 days | $10,400 |
Past due over 60 days | 7,800 |
Required
a. Prepare the 2020 entry to write off the uncollectible accounts.
b. Prepare the 2020
1. Bad debt expense is based on credit sales, 1.5%. (Hint: See p. 8-19: Alternative to Estimating Net Realizable Value)
2. The Allowance for Doubtful accounts is based on total receivables at year-end, 2.5%.
3. The Allowance for Doubtful accounts is based on aging schedule: not past due, 0.5%; past due 1–60 days, 1%; and past due over 60 days, 8%.
4. Bad debt expense is based on direct write-off method (assume entry in part a has not been recorded).
c. Prepare the 2020
a.
Date | Account Name | Dr. | Cr. |
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Dec. 31, 2020 | Answer |
Answer | Answer |
Answer
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Answer | Answer |
b. Note: Treat each scenario separately, they are independent of one another.
1.
Date | Account Name | Dr. | Cr. |
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Dec. 31, 2020 | Answer |
Answer | Answer |
Answer
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Answer | Answer |
2.
Date | Account Name | Dr. | Cr. |
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Dec. 31, 2020 | Answer |
Answer | Answer |
Answer
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Answer | Answer |
3.
Date | Account Name | Dr. | Cr. |
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Dec. 31, 2020 | Answer |
Answer | Answer |
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Answer | Answer |
4.
Date | Account Name | Dr. | Cr. |
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Dec. 31, 2020 | Answer |
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c.
Note: Do not use negative signs with your answers.
Balance Sheet, December 31, 2020 | 1 | 2 | 3 | 4 |
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Accounts receivable | Answer | Answer | Answer | Answer |
Less: Allowance for doubtful accounts | Answer | Answer | Answer | Answer |
Accounts receivable, net | Answer | Answer | Answer | Answer |
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