At the beginning of May, Sweetwater Limited, which records adjusting entries at

Question

At the beginning of May, Sweetwater Limited, which records adjusting entries at the end of each month, had an Accounts Receivable amount of $30,000 and an Allowance for Doubtful Accounts balance of $5,400. During May, the company had credit sales of $39,900 and collected $35,000 from customers. It also wrote off a certain amount of uncollectible receivables during the month and recorded a certain amount of bad debts expense at the end of the month. No accounts that were written off during the month were subsequently recovered. At the end of May, after all journal entries had been recorded and posted, the balance in Accounts Receivable was $31,700 while Allowance for Doubtful Accounts had a balance of $4,900

Prepare T accounts for Accounts Receivable and Allowance for Doubtful Accounts. Post the above transactions and determine the missing amounts for the write off of uncollectible receivables and bad debts expense.

At the beginning of May, Sweetwater Limited, which records adjusting entries at the end of each month, had an Accounts Receivable amount of $30,000 and an Allowance for Doubtful Accounts balance of $5,400. During May, the company had credit sales of $39,900 and collected $35,000 from customers. It also wrote off a certain amount of uncollectible receivables during the month and recorded a certain amount of bad debts expense at the end of the month. No accounts that were written off during the month were subsequently recovered. At the end of May, after all journal entries had been recorded and posted, the balance in Accounts Receivable was $31,700 while Allowance for Doubtful Accounts had a balance of $4,900

Accounts Receivable Bad Debts Collections May 1 Balance May 31 Balance Sales Write offs Allowance for Doubtful Accounts

Explanation / Answer

Accounts Receivable May 1 balance $30,000 Collections          35,000 Sales          39,900 Write offs*            3,200 May 31 Balance $31,700 *(30000+39900-35000-31700) Allowance for Doubtful Accounts Write offs            3,200 May 1 Balance $5,400 Bad Debts**            2,700 May 31 Balance $4,900 **(4900-(5400-3200)) Journal Entry Account Titles and Explanation Debit Credit Allowance for Doubtful Accounts $        3,200 Accounts Receivable $        3,200 (To record the write off of uncollectibles) Bad debts expense $        2,700 Allowance for Doubtful Accounts $        2,700 (To record the bad debt expense for May)

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