Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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,

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
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: During 2021, credit sales were $1,775,000, cash collections from customers $1,855,000, and $40,000 in accounts receivable were written off, In addition, $3,500 was collected from a customer whose account was written off in 2020 . An aging of accounts receivable at December 31, 2021, reveals the following: 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: a. Bad debt expense is estimated to be 3% 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 recelvable 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. c. Bad debt expense is estimated by adjusting the allowance for uncollectible accounts to the balance that reduces the carrying value of accounts recelvable 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? 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.) Journal entry worksheet Record accounts receivabie written off during the year 2021. Note: Enter debits before credits. Prepare the year-end adjusting entry for bad debts. (If no entry is required for a transaction/event, select "No joumal entry required" in the first account field.) Journal entry worksheet Bad debt expense is estimated to be 3% of credit sales for the year. Nate: Enter debits before credits. For situations (a)-(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2021 balance sheet

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Power Of Accounting What The Numbers Mean And How To Use Them

Authors: Lawrence Lewis

1st Edition

0415884306, 978-0415884303

More Books

Students also viewed these Accounting questions

Question

Conduct a needs assessment. page 283

Answered: 1 week ago