Help Save & Exercise 7-10 Uncollectible accounts; allowance method vs. direct wr

Question

Help Save & Exercise 7-10 Uncollectible accounts; allowance method vs. direct write-off method L07-5,7-6) Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is percentage of credit sales. For 2018, net credt allowance for uncollectible accounts had a credit balance of $43,000 at the beginning of the end of 2018 sales totaled $4,600,000, and the estimated bad debt percentage is 1.60%. The 2018 and $40.500. after adjusting entries, at Required: 1. What is bad debt expense for 2018 as a percent of net credit sales 2. Assume Johnson makes no other adjustment of bad debt expense during 2018. Determine the amount of accounts receivable written off during 2018 3. If the company uses the direct write-off method, what would bad debt expense be for 20181 1 Bad debt expense 3. Bad debt expense Prev 1 or 4 Next 8 9 3

Explanation / Answer

Answer:

Bad debt expanses

73600

Account receivable written off

76100

Bad debt expanses

76100

Working notes for the above answer is as under

1

Bad debt Expanses

=1.60% of the credit sales

=1.60% X 4,600,000

=$73,600

2

Calculation of the amount of accounts receivable written off during 2018

Allowance for uncollectable Account

Account receivable

76100

Beginning Balance

43000

(43000+73600-40500)

Ending balance

40500

Bad debt expanses

73600

116600

116600

3

Bad debt Expanses = 76100

Under direct write off method, bad debt expense is consider only when it actually bad debt incurred. The actual bad expense will be equal to accounts receivable written off during the year.

Bad debt expanses

73600

Account receivable written off

76100

Bad debt expanses

76100

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.