Cameron Produce estimates bad debt expense at 1/2% of credit sales. The company

Question

Cameron Produce estimates bad debt expense at 1/2% of credit sales. The company reported accounts receivable and allowance for uncollectible accounts of $471,000 and $1,650, respectively, at December 31, 2015. During 2016, Cameron's credit sales and collections were $315,000 and $319,000, respectively, and $1,720 In accounts receivable were written off of which $ 250 were recovered. Required: Prepare journal entries including any necessary adjusting journal entries. Calculate accounts receivable (net) as of the end of the year.

Explanation / Answer

**Balance of Receivable =Beginning +credit sales -collections +recovered receivables -cash collected from recovered receivables

                               = 471000 + 315000 - 319000 + 250 -250

                               = 467000

**Balance of allowance account at year end = Beginning + Bad debt expense - write off +recovered write offs

                                                              = 1650 + 1575 - 1720 + 250

                                                              = $ 1755

Net receivable at year end = 467000 - 1755 =$ 465,245

Date Title Debit credit a Bad debt expense 1575 Allowance for uncollectible account 1575 [being bad debt expense recorded (315000*.5%] b Allowance for uncollectible account 1720 Accounts receivable 1720 [being receivable write off] c -1 Accounts receivable 250 Allowance for uncollectible account 250 [being receivable write off earlier again became due] c-2 cash 250 Accounts receivable 250 [being receivable collected ]

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