At the end of its accounting period, December 31, 2020, Petunia Corp showed unadjusted balances of $35,000 in Accounts Receivable $1,100 credit in Allowance for Doubtful Accounts and $264,000 in Sales Uncollectible accounts are estimated to be 2 8 of sales Unadjusted balances at December 31, 2021, were $42,000 for Accounts Receivable $560 debit in Allowance for Doubtful Accounts and $313,000 in Sales Petunia Corp changed the method of estimating uncollectible accounts to 7 of outstanding accounts receivable Required Prepare the 2020 and 2021 year end adjusting entries to estimate uncollectible accounts Show how accounts receivable would appear on the December 31, 2020 , balance sheet On April 20, 2021, Petunia decided that the $1,650 account of Rose Ltd was uncollectible and wrote it off as bad debt Prepare the entry On June 30, 2021, Rose Ltd paid the $1,650 prepare the entry to record this receipt Assume now that Petunia Corp does not use the allowance method, instead they use the direct write off method How would the entry differ from the entry in Requirement 3

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 17, 2024

At the end of its accounting period, December 31, 2020, Petunia Corp. showed unadjusted balances of $35,000 in Accounts Receivable; $1,100 credit in Allowance for

At the end of its accounting period, December 31, 2020, Petunia Corp. showed unadjusted balances of $35,000 in Accounts Receivable; $1,100 credit in Allowance for Doubtful Accounts; and $264,000 in Sales. Uncollectible accounts are estimated to be 2.8% of sales.

Unadjusted balances at December 31, 2021, were $42,000 for Accounts Receivable; $560 debit in Allowance for Doubtful Accounts; and $313,000 in Sales. Petunia Corp. changed the method of estimating uncollectible accounts to 7% of outstanding accounts receivable.

Required

Prepare the 2020 and 2021 year-end adjusting entries to estimate uncollectible accounts.
Show how accounts receivable would appear on the December 31, 2020, balance sheet.
On April 20, 2021, Petunia decided that the $1,650 account of Rose Ltd. was uncollectible and wrote it off as bad debt. Prepare the entry.
On June 30, 2021, Rose Ltd. paid the $1,650; prepare the entry to record this receipt.
Assume now that Petunia Corp. does not use the allowance method, instead they use the direct write-off method. How would the entry differ from the entry in Requirement 3?