Question
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 2017, accounts receivable were $600,000 and the allowance account had a credit balance of $64,000. Accounts receivable activity for 2018 was as follows:
Beginning balance | $ | 600,000 | ||
Credit sales | 2,750,000 | |||
Collections | (2,613,000 | ) | ||
Write-offs | (52,000 | ) | ||
Ending balance | $ | 685,000 | ||
The companys controller prepared the following aging summary of year-end accounts receivable:
Summary | ||||
Age Group | Amount | Percent Uncollectible | ||
060 days | $ | 435,000 | 3 | % |
6190 days | 93,000 | 10 | ||
91120 days | 62,000 | 21 | ||
Over 120 days | 95,000 | 36 | ||
Total | $ | 685,000 | ||
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 2018? 3-b. How would accounts receivable appear in the 2018 balance sheet?
Reg 1 Reg 2 Req 3A Req3B aped Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the ye 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. General Journal Event Debit Credit Record entry Clear entry View general journal 2.5 points Req 1 Req 2 Reg 3A Reg 3B Spoed Prepare the necessary year end adjusting entry for bad debt expense. (If no entry is required for a transaction/ever entry required" in the first account field.) View transaction list Journal entry worksheet Record the year-end adjusting entry for bad debt expense. Notes Enter debits before credits Event General Journal Debit Credit Record entry Clear entry View general journal I Reqt RegJA > Total $685,000 Required: 1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-of 2. Prepare the necessary year-end adjusting entry for bad debt expense. 3-a. What is total bad debt expense for 2018? 3-b. How would accounts receivable appear in the 2018 balance sheet? Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Reg 3A Req 3B What is total bad debt expense for 2018? Bad debt expense Total $685,000 Required: 1. Prepare a summary journal entry to record the monthly bad debt accrual ar 2. Prepare the necessary year-end adjusting entry for bad debt expense. 3-a. What is total bad debt expense for 2018? 3-b. How would accounts receivable appear in the 2018 balance sheet? Complete this question by entering your answers in the tabs below. Reg 1 Reg BA Reg 3B How would accounts receivable appear in the 2018 balance sheet? Balance Sheet (partial) Current asse Accounts receivable (net)Step by Step Solution
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