Estimating and Recording Bad Debt Estimates and Write$-$Offs; Reporting of Accounts Receivable

Mast Company's December $31$ balances from the prior year related to accounts receivable follow.

Accounts receivable $($Dr$.)$

Allowance for doubtful accounts $($Cr$.)$

$$480,000$

$24,000$

During the current year, $$54,000$ of accounts receivable is considered uncollectible, and no more effort to collect these accounts will be made. Total sales for the current year are $$1,440,000,$ of which $$240,000$ are cash sales. A total of $$1,080,000$ cash was collected during the current year from sales that were originally made on account.

Required

a$.$ Assuming that Mast applies the allowance method to estimate net accounts receivable and uses $9\%$ of accounts receivable as its estimate of expected credit losses, prepare the $(1)$ journal entries to record write$-$offs and to record bad debt expense for the current year, and $(2)$ disclosure on gross and net accounts receivable on the balance sheet at December $31$ of the current year.

$$ Note: Do not use negative signs in your answers. a$.(1)$

Date

Dec. $31$

Dr$.$

Cr$.$

Dec. $31$

Account Name

Allowance for Doubtful Accounts

Accounts Receivable

To record account write$-$off.

Bad Debt Expense

Allowance for Doubtful Accounts

To record bad debt expense.

a$.(2)$

Balance Sheet, December $31$

Accounts receivable

Less: Allowance for doubtful accounts

Accounts receivable, net

b$.$ How would your answers to part a change, if at all, assuming instead that the prior year December $31$ balance in Allowance for Doubtful Accounts was a credit of $$6,000?$

$$ Note: Do not use negative signs in your answers.

a$.(2)$

Balance Sheet, December $31$

Accounts receivable

Less: Allowance for doubtful accounts

Accounts receivable, net

b$.$ How would your answers to part a change, if at all, assuming instead that the prior year December $31$ balance in Allowance for Doubtful Accounts was a credit of $$6,000?$

$$ Note: Do not use negative signs in your answers.

b$.(1)$

Date

Account Name

Dr$.$

Cr$.$

Dec. $31$

$$

$$

To record account write$-$off.

Dec. $31$

$$

To record bad debt expense.

b$.(2)$

Balance Sheet, December $31$

Accounts receivable

Less: Allowance for doubtful accounts

Accounts receivable, net

$