Problem 1 : PS9-42

Background:

Crystal Clear Cleaning uses the allowance method to estimate bad debts. Consider the following January transactions for Crystal Clear.

Assignment:

This question has 4 requirements. Scroll down to review the requirements and ensure you complete all requirements before submitting your work for grading.

Requirements

1. The accounts used by Crystal Clear Cleaning are provided in the Chart of Accounts (click on Chart of Accounts to view). The accounts have already been opened in the General Ledger (click on General Ledger to view).
2. Prepare journal entries to record the January transactions and post the entries to the General Ledger.
3. Review each of the accounts in the General Ledger to see the results of posting the journal entries for the January transactions, including the changes in each account as well as the balance in each.
4. Review the net accounts receivable section of the balance sheet for Crystal Clear Cleaning as of January 31, 2018 (click on Balance Sheet to view).

Transactions:

01/01/2018

Performed cleaning service for Debbies D-list for $9,000 on account with terms 3/10, n/20.

01/10/2018

Borrowed money from High Roller Bank, $20,000, making a 180 day, 15% note.

01/12/2018

After discussions with Merry Cleaners, Crystal Clear has determined that $275 of the receivable owed will not be collected. Wrote off this portion of the receivable.

01/15/2018

Sold goods to Westford for $8,000 on account with terms 5/10, n/30. Cost of Goods Sold was $400.

01/28/2018

Sold goods to Meaghan, Inc. for cash of $2,000 (cost $350).

01/28/2018

Collected from Merry Cleaners, $275 of receivable previously written off.

01/29/2018

Paid cash for utilities of $450.

01/31/2018

Created an aging schedule for Crystal Clear for accounts receivable. Crystal Clear determined that $8,100 of receivables were 5% uncollectible, $9,775 of receivables were 15% uncollectible, and $850 of receivables were 30% uncollectible. Crystal Clear determined the total amount of estimated uncollectible receivables and adjusted the Allowance for Bad Debts assuming a credit balance of $240 in the account. (Round to nearest whole dollar.)