Question
Accounts Receivable and Credit Losses At January 1, the Chesley Company had the following accounts on its books: Accounts receivable . . . . .
Accounts Receivable and Credit Losses At January 1, the Chesley Company had the following
accounts on its books:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $252,000
Allowance for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,600
During the year, credit sales were $1,622,000 and collections on account were $1,588,000. The following transactions, among others, occurred during the year:
Jan. 11 Wrote off J. Smiths account, $5,600.
Apr. 29 Wrote off B. Birds account, $2,000.
Nov. 15 Received $1,000 from B. Bird to pay a debt that had been written off April 29. This
amount is not included in the $1,588,000 collections.
Dec. 5 Wrote off D. Fingers account, $4,300.
31 Adjusted the allowance for doubtful accounts to one percent of credit sales for the year.
REQUIRED
a. What is the amount of Bad Debt Expense for the year?
b. Determine the balance in Accounts Receivable and the Allowance for Doubtful Accounts.
c. Show how Accounts Receivable and the Allowance for Doubtful Accounts appear on the December 31 balance sheet.
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