Question
On December 31, 2020 the Rocket Inc, general ledger contained the following balances prior to adjustments: Accounts Receivable: $369,780 Allowance for Doubtful Accounts ($3,480) Net
On December 31, 2020 the Rocket Inc, general ledger contained the following balances prior to adjustments:
Accounts Receivable: $369,780 Allowance for Doubtful Accounts ($3,480) Net credit Sales $917,400
Before completing an aging analysis to determine the estimated amount uncollectible, Rocket decided to write of $3,900 of an account past due over 360 days. Aging of the account receivable balances after the write- off on December 31 indicated the following:
Age | Amount | Uncollectible |
under 30 days | $203,280 | 1.5% |
30-90 days | $93,600 | 3.0% |
91-180 days | $51,600 | 7.0% |
181-360 days | $14,400 | 20% |
over 360 days | $3,000 | 60% |
Total | $365,880 |
Required:
a) prepare the necessary journal entry to record the write-off of $3,900
b) prepare the adjusting entry at December 31 to record Rocket, Inc's estimated bad debt assuming that the company uses the aging of accounts receivable method.
c) what is the net realizable value of accounts receivable on the December 31, 2020 balance sheet?
d) A customer, whose $1,800 account receivable had been written off, has paid the amount in full on Jan 10, 2021. Prepared the journal entry or entries, to record the recovery of the accounts receivable preveiously written off.
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