Johnson Company uses the allowance method to account for uncollectible accounts
ID: 2419646 • Letter: J
Question
Johnson Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2013, net credit sales totaled $6,000,000, and the estimated bad debt percentage is 1.50%. The allowance for uncollectible accounts had a credit balance of $57,000 at the beginning of 2013 and $47,500, after adjusting entries, at the end of 2013.
What is bad debt expense for 2013?
Determine the amount of accounts receivable written off during 2013
RequiredExplanation / Answer
Answer 1. Bad Debts Expense = $6,000,000 X 1.50% = $90000 Answer 2. Amount of Accounts Receivables Written off = $80500 Allowance for Uncollectible debts Particulars Amount Particulars Amount Accounts receivables 80500 Balance at beginning 47500 (Amt written off) Bad debts 90000 Balance at the End 57000 137500 137500 Answer 3. With the direct write-off method, bad debt expense is not recorded until an account is written off. So the answers is $80,500
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