Question
Seahawks Touchdowns, Inc. reported the following on its December 31, 2019 balance sheet (000s omitted): Accounts Receivable, net of allowance for doubtful accounts of $462
Seahawks Touchdowns, Inc. reported the following on its December 31, 2019 balance sheet (000s omitted):
Accounts Receivable, net of allowance for doubtful accounts of $462 $1,788
The company makes its adjusting entry for bad debts at the end of the year. During 2020, cash collections were $3,432. In addition, $368 in accounts receivable were written off and $3 was collected from an account written off in 2018. An aging of accounts receivable reveals the following:
| Age Group | Amount | Estimated % Uncollectible |
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| current | 880 | 5% |
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| 31-60 | 550 | 14% |
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| 61-90 | 440 | 50% |
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| 91-120 | 220 | 75% |
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| 121+ | 110 | 90% |
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| 2,200 |
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Show your work and highlight your answer. T-accounts are included above if needed.
A. What were credit sales during 2020? _________________________
The next two questions are independent of each other.
B. If the company records bad debts based on the aging analysis, what is the 12/31/20 adjusting entry? NRV of A/R? Show your work and highlight your answers.
Adjusting Journal Entry:
Net Realizable Value of Accounts Receivable 12/31/20: _________________________
C. If the company records bad debts as 12.0% of credit sales, what is the 12/31/20 adjusting entry? NRV of A/R? Show your work and highlight your answers.
Adjusting Journal Entry:
Net Realizable Value of Accounts Receivable 12/31/20: _________________________
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