Swathmore Clothing Corporation grants its customers 30 days' credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 3% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly. At the end of 2020, accounts receivable were $582,000 and the allowance account had a credit balance of $46,000. Accounts receivable activity for 2021 was as follows: Beginning balance 582,000 2,660,000 Credit sales Collections Write-offs Ending balance (2,523,000) (43,000) 676,000 The company's controller prepared the following aging summary of year-end accounts receivable: Age group Amount 0-60 days 390,000 61-90 days 93,000 91-120 days 53,000 over 120 days 140,000 Total 676,000 % uncollectable 3% 13% 23% 34% 1 Prepare a journal entry to record the full 12 months of bad debt accrual. 2 Prepare the journal entry to record the write-offs that occurred during the year. 3 Prepare the necessary year-end adjusting entry for bad debt expense. 4 What is total bad debt expense for 2021? 5 How would accounts receivable appear in the 2021 balance sheet? 1 a) Record 12 months of bad debt acrrual dr. cr. 2 b) Record write-offs dr. cr. 3 c) AJE for bad debt expense dr. cr. 4 bad debt expense = BD accruals booked during the year +/- any year-end adjustment to the allowance +/- 5 How would accounts receivable appear in the 2021 balance sheet? What year-end adjustment is needed? Age group Amount % uncollectable Amount 0-60 days 390,000 3% 61-90 days 93,000 13% 91-120 days 53,000 23% over 120 days 140,000 34% Total 676,000 Allowance (ADA): Beginning balance + 12 months of bad debt accrual -write-offs balance before YE adjustment Required allowance (determined prior) Required YE increase in allowance ADA 0 0 0 oo o ADA desired balance