Swiss Supplies showed the following selected adjusted balances at its December 31, 2019, year-end: During 2020, the

Question:

Swiss Supplies showed the following selected adjusted balances at its December 31, 2019, year-end:

image

During 2020, the following selected transactions occurred:

a. Sales totalled $2,800,000, of which 25% were cash sales (cost of sales $1,804,000).

b. Sales returns were $108,000, half regarding credit sales. The returned merchandise was scrapped.

c. An account for $24,000 was recovered.

d. Several accounts were written off: $26,000.

e. Collections from credit customers totalled $1,790,000 (excluding the recovery in (c) above).

Part A

Required

1. Journalize transactions (a) through (e). You may find it useful to post your entries to T-accounts for Accounts Receivable and Allowance for Doubtful Accounts.

Part B

Required

2. Prepare the December 31, 2020, adjusting entry to estimate bad debts assuming that uncollectible accounts are estimated to be 1% of net credit sales.

3. Show how accounts receivable will appear on the December 31, 2020, balance sheet.

4. What will bad debt expense be on the income statement for the year ended December 31, 2020?

Part C (independent of Part B)

Required

5. Prepare the December 31, 2020, adjusting entry to estimate bad debts assuming that uncollectible accounts are estimated to be 3% of outstanding receivables.

6. Show how accounts receivable will appear on the December 31, 2020, balance sheet.

7. What will bad debt expense be on the income statement for the year ended December 31, 2020?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Fundamental Accounting Principles Volume I

ISBN: 978-1260305821

16th Canadian edition

Authors: Kermit Larson, Tilly Jensen, Heidi Dieckmann

Question Posted: