Question
The following account balances were found for Celtics Ltd. at the beginning of its fiscal year, January 1, 2020: Accounts Receivable....................................................................... $1,240,250 Allowance for Doubtful
The following account balances were found for Celtics Ltd. at the beginning of its fiscal year, January 1, 2020:
Accounts Receivable....................................................................... $1,240,250
Allowance for Doubtful Accounts................................................... (19,220)
Sales for the year were $8,100,000, of which 60% was on credit, and credit sales returns were $146,000. Cash collections were $5,416,000. In 2020, Celtics had also written off $62,500 of its accounts receivable due to probable delinquency. The company’s credit and collection manager has estimated that 6% of outstanding accounts receivable are uncollectible.
Instructions
Show all calculations and round all figures to the whole dollars:
- Calculate the amount of the net credit sales.
- Using the allowance method, prepare the entry recording of the accounts receivable written off in 2020.
- Calculate the bad debt expense for the year and record the appropriate journal entry.
Step by Step Solution
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Answer a Total Sales 8100000 Gross Credit Sales 60 Total Sales Gross Credit Sales 60 8100000 Gross C...Get Instant Access to Expert-Tailored Solutions
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