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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 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 $604,000 and the allowance account had a credit balance of $68,000. Accounts receivable activity for 2021 was as follows: Beginning balance Credit sales Collections Write-offs $ 604,000 2,770,000 (2,633,000) (54,000) $ 687,000 Ending balance 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 Amount $445,000 72,000 64,000 106,000 $687,000 Summary Percent Uncollectible 4 % 12 23 38 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? Req 1 Reg 2 Req Req 3B Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record a summary entry to record the monthly bad debt accrual. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general journal Req 1 Reg 2 Req 3A Req 3B Prepare the necessary year-end adjusting entry for bad debt expense. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the year-end adjusting entry for bad debt expense. Note: Enter debits before credits. Event General Journal Debit Credit 1 Record entry Clear entry View general journal Req 1 Req 2 Req 3A Req 3B Req 2 What is total bad debt expense for 2021? Bad debt expense Req 1 Reg 2 Req 3A Req 3B How would accounts receivable appear in the 2021 balance sheet? Balance Sheet (partial) Current assets: Accounts receivable (net)
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