Problem 1:)Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2020 balance sheet disclosed the following:
Current assets: Receivables, net of allowance for uncollectible accounts of $37,000 $ 467,000
During 2021, credit sales were $1,785,000, cash collections from customers $1,865,000, and $42,000 in accounts receivable were written off. In addition, $3,700 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following:
Percentage of Year-End Percent Age Group Receivables in Group Uncollectible 0?60 days 60 % 3 % 61?90 days 10 5 91?120 days 20 25 Over 120 days 10 45
Required:
1. Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previously written off.
2. Prepare the year-end adjusting entry for bad debts according to each of the following situations:
- Bad debt expense is estimated to be 2% of credit sales for the year.
- Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces the carrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable.
- Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces the carrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectible accounts is determined by an aging of accounts receivable.
3. For situations (a)?(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2021 balance sheet?
Metro by T-Mobile 12:55 AM 10+ A ezto.mheducation.com - Private Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2020 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $37,000 $ 467,000 During 2021, credit sales were $1,785,000, cash collections from customers $1,865,000, and $42,000 in accounts receivable were written off. In addition, $3,700 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following: Percent Age Group Percentage of Year-End Receivables in Group Uncollectible 0-69 days 60% 61-10 days 10 5 91-120 days 25 Over 120 days 10 Required: 1. Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previously written off. 2. Prepare the year-end adjusting entry for bad debts according to each of the following situations: . Bad debt expense is estimated to be 2% of credit sales for the year. b. Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces the carrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable. .. Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces the carrying value of accounts receivable to the amount of cash expected to be collected. The allowance for uncollectible accounts is determined by an aging of accounts receivable. 3. For situations (a)-(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2021 balance sheet? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previously written off. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Show lessa View transaction list Journal entry worksheet 2 Record accounts receivable written off during the year 2021. Noter Enter debits before credits. Even General Journal Debit CreditMetro by T-Mobile 12:56 AM A ezto.mheducation.com - Private 2. Award: 16.66 points Lonergan Company occasionally uses its accounts receivable to obtain immediate cash. At the end of June 2021, the company had accounts receivable of $940,000. Lonergan needs approximately $580,000 to capitalize on a unique investment opportunity. On July 1, 2021, a local bank offers Lonergan the following two alternatives: a. Borrow $580,000, sign a note payable, and assign the entire receivable balance as collateral. At the end of each month, a remittance will be made to the bank that equals the amount of receivables collected plus 12% interest on the unpaid balance of the note at the beginning of the period. b. Transfer $630,000 of specific receivables to the bank without recourse. The bank will charge a 2% factoring fee on the amount of receivables transferred. The bank will collect the receivables directly from customers. The sale criteria are met. Required: 1. Prepare the journal entries that would be recorded on July 1 for: a. alternative a. b. alternative b. 2. Assuming that 90% of all June 30 receivables are collected during July, prepare the necessary journal entries to record the collection and the remittance to the bank for: a. alternative a. b. alternative b. Complete this question by entering your answers in the tabs below. Reg LA Req 1B Req 24 Req 20 Prepare the journal entries that would be recorded on July 1 for alternative a. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Show lessa View franaaction list Journal entry worksheet Record the borrowing $580,000, sign a note payable, and assign the entire receivable balance as collateral, Note: Enter debits before ornots. Date General Journal Debit Credit July 01 2021 Hacond entry Clear Entry View general journal
