Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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 2020, accounts receivable were $612,000 and the allowance account had a credit balance of $76,000. Accounts receivable activity for 2021 was as follows: Beginning balance Credit sales Collections Write-offs Ending balance $ 612,000 2,810,000 (2,673,000) (58,000) $ 691,000 The company's controller prepared the following aging summary of year-end accounts receivable: Age Group 0-60 days 61-90 days 91-120 days Over 120 days Total Summary Amount Percent Uncollectible $465,000 5 % 80,000 10 68,000 27 78,000 35 $691,000 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 2021? 3-b. How would accounts receivable appear in the 2021 balance sheet? Journal entry worksheet 1 2 > Record a summary entry to record the monthly bad debt accrual. Note: Enter debits before credits. Debit Credit Event 1 General Journal Bad debt expense Allowance for uncollectible accounts 56,200 56,200 Record entry Clear entry View general journal Journal entry worksheet 1 2 Record a summary entry to record the 2021 write-offs. Note: Enter debits before credits. Credit Event 2 General Journal Allowance for uncollectible accounts Accounts receivable Debit 58,000 58,000 Record entry Clear entry View general Journal Journal entry worksheet Reg 1 Reg 2 Req 3A Reg 3B ....................................................................................................... How would accounts receivable appear in the 2021 balance sheet? Balance Sheet (partial) Current assets: Accounts receivable (net)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started