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 companys 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
060 days	60	%	3	%
6190 days	10		5
91120 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:

1. Bad debt expense is estimated to be 2% of credit sales for the year.
2. 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.
3. 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?

REQUIREMENT 1

Part 1

• Record accounts receivable written off during the year 2021.

Note: Enter debits before credits.

Event	General Journal	Debit	Credit
1	Allowance for uncollectible accounts	42,000
	Accounts receivable		42,000

Part 2:

• Record entry to reinstate an account receivable previously written off.

Note: Enter debits before credits.

Event	General Journal	Debit	Credit
2	Accounts receivable	3,700
	Allowance for uncollectible accounts		3,700

Part 3:

• Record collection of an account receivable previously written off.

Note: Enter debits before credits.

Event	General Journal	Debit	Credit
3	Cash	3,700
	Accounts receivable		3,700

REQUIREMENT 2:

Part 1:

• Bad debt expense is estimated to be 2% of credit sales for the year.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
a.	Bad debt expense	35,700
	Allowance for uncollectible accounts		35,700

Part 2:

• Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is estimated to be 10% of the year-end balance in accounts receivable.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
b.	Bad debt expense
	Allowance for uncollectible accounts

Part 3:

• Bad debt expense is estimated by computing net realizable value of the receivables. The allowance for uncollectible accounts is determined by an aging of accounts receivable.

Note: Enter debits before credits.

Transaction	General Journal	Debit	Credit
c.

REQUIREMENT 3:

For situations (a)(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2021 balance sheet?

	Net account receivable reported
a.
b.
c.