Assume that the beginning 2015 balance in Britton Corporation\'s Allowance for D

Question

Assume that the beginning 2015 balance in Britton Corporation's Allowance for Doubtful Accounts account is $2,400 credit. (1) Assume Britton Corporation estimates that 1% of their 2015 credit sales (which were $732,000 during the year) will not be collectible. Assume further that in May of 2016, Britton decides to write off a specific account in the amount of $1,350. Further assume that in December of 2016, that previously written off account of $1,350 paid their debt to Britton in full. Provide all necessary entries for this set of facts. (HINT: Percentage of sales method means that's the amount you put into the account, not the ending balance that is needed.) (2) lgnore what you did in part (1). Assume that in May of 2016, Britton decides to write off a specific account in the amount of $1,350. Further assume that in December of 2016, that previously written off account of $1,350 paid their debt to Britton in full. At the end of the year, Britton Corporation estimates that 1,2% of ending accounts receivable (which was $148,000) will not be collected. Provide all necessary entries for this set of facts. (HINT Percentage of ending A/R method gives you the balance you need in the allowance account, not the amount by which you change it.) (3) Ignore what you did in parts (1) and (2). Now assume that Britton uses the direct write- off method to estimate bad debts. Assume further that in May of 2016, Britton decides to write off a specific account in the amount of $1,350. Provide the entry for that write off

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Solution 2:

Solution 3:

Journal Entries - Britton Corporation Date Particulars Debit Credit December-15 Bad Debts Expense Dr ($732,000*1%) $7,320.00         To Allowance for doubtful accounts $7,320.00 (To record bad debts expenses) May-16 Allowance for doubtful accounts Dr $1,350.00         To Accounts receivables $1,350.00 (To write off bad debts) December-16 Accounts receivables Dr $1,350.00         To Allowance for doubtful accounts $1,350.00 (To reinstate receivabls previously written off) December-16 Cash Dr $1,350.00         To Accounts receivables $1,350.00 (To record collection from receivables previously written off)

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