Juniper Company was formed in 1993. Sales have increased on the average of 5% per year during
Question:
Juniper Company was formed in 1993. Sales have increased on the average of 5% per year during its first ten years of existence, with total sales for 2002 amounting to $400,000. Since incorporation, Juniper Company has used the allowance method to account for uncollectible accounts receivable. On January 1, 2003, the company’s Allowance for Bad Debts had a credit balance of $5,000. During 2003, accounts totaling $3,500 were written off as uncollectible. 1. What does the January 1, 2003, credit balance of $5,000 in Allowance for Bad Debts represent? 2. Since Juniper Company wrote off $3,500 in uncollectible accounts receivable during 2003, was the prior year’s estimate of uncollectible accounts receivable overstated? 3. Prepare journal entries to record:
a. The $3,500 write-off of receivables during 2003.
b. Juniper Company’s 2003 bad debt expense, assuming an aging of the December 31, 2003, accounts receivable indicates that potential uncollectible accounts at year-end total $9,000.
Step by Step Answer:
Financial Accounting
ISBN: 9780324066708
8th Edition
Authors: W. Steven Albrecht, James D. Stice, Earl Kay Stice, K. Fred Skousen, Albrecht S.E.