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answer Alpha Company\'s accounts receivable and allowance for doubtful accounts

ID: 2503993 • Letter: A

Question

answer

Alpha Company's accounts receivable and allowance for doubtful accounts balances were $100,000 and $14,000 (credit) respectively, at the beginning of 2012. During 2012, a customer defaults on a $12,000 balance related to goods purchased during 2011. By the end of the year, the company had made credit sales of $2,400,000 and collected $2,200,000 on account. It now estimates that 1 percent of its credit sales will default. A) Prepare the journal entry to record the write off the bad debt. B) Prepare the adjusting entry to record bad debt expense for 2012.

Explanation / Answer

A)DEBIT ALLOWANCE FOR DOUBTFUL ACCOUNTS = 12000

CREDIT ACCOUNTS RECIEVABLE = 12000



B)DEBIT BAD EXPENSE [2400000*1%] = 24000

CREDIT ALLOWANCE FOR DOUBTFUL ACCOUNTS = 24000



C)OPENING BALANCE OF ACCOUNTS RECIEVABLE = 100000

ADD:- CREDIT SALES MADE = 2400000

LESS:-ACCOUNTS RECIEVABLE COLLECTED = (2200000)

CLOSING ACCOUNTS RECIEVABLE = 300000



NET ACCOUNTS RECIEVABLE :-

COLOSING ACCOUNTS RECIEVABLE = 300000

LESS:- ALLOWANCE FOR DOUBTFUL DEBTS [24000-12000] = (12000)

NET ACCOUNTS RECIEVABLE = 288000 [ANSWER]