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Swathmore Clothing Corporation grants its customers 30 days' credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a
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 2% 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 2023, accounts receivable were $592,000 and the allowance account had a credit balance of $56,000. Accounts receivable activity for 2024 was as follows: Beginning balance Credit sales Collections Write-offs Ending balance $ 592,000 2,710,000 (2,573,000) (48,000) $ 681,000 The company's controller prepared the following aging summary of year-end accounts receivable: Summary Percent Age Group Amount Uncollectible 0-60 days $ 415,000 4% 61-90 days 98,000 12 91-120 days Over 120 days Total 58,000 28 110,000 39 $ 681,000 Required: 1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year. 2. Prepare the necessary year-end adjusting entry for bad debt expense. 3-a. What is total bad debt expense for 2024? 3-b. How would accounts receivable appear in the 2024 balance sheet? Complete this question by entering your answers in the tabs below.
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