Estimating Bad Debts from Receivables Balances

The following information is extracted from Shelton Corporation's accounting records at the beginning of 2013:

Accounts Receivable	$64,000
Allowance for Doubtful Accounts	900	(credit)

During 2013, sales on credit amounted to $600,000, $558,000 was collected on outstanding receivables and $2,500 of receivables were written off as uncollectible. On December 31, 2013, Shelton estimates its bad debts to be 5% of the outstanding gross accounts receivable balance.

1. Prepare the journal entry necessary to record Shelton's estimate of bad debt expense for 2013.

Dec 31	$	$
	$		$

2. Prepare the Accounts Receivable section of Shelton's December 31, 2013 balance sheet.

Shelton Corporation

Receivables portion of balance sheet

December 31, 2013

Accounts receivable	$.....
Allowance for doubtful account	$.....
Net accounts receivable	$.....

3. Compute Shelton's receivables turnover. If required, round your answer to one decimal place.

4. If Shelton Company uses IFRS, what might be the heading for the accounts receivable section in Requirement 2?