Answered step by step
Verified Expert Solution
Link Copied!

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 4% 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 was $578,000 and the allowance account had a credit balance of $42,000. Accounts receivable activity for 2021 was as follows: Beginning balance $578,000 Credit sales 2,640,000 Collections (2,503,000) Write-offs (40,000) Ending balance $673,000 The companys controller prepared the following aging summary of year-end accounts receivable: Summary Amount % Uncollectible 060 days 380,000 5 % 6190 days 100,000 11 91120 days 51,000 21 Over 120 days 143,000 32 Total 674,000 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?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Internal Auditing An Integrated Approach

Authors: Richard E. Cascarino

2nd Edition

0702172693, 978-0702172694

More Books

Students also viewed these Accounting questions