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1)Identify the amount of bad debts expense that Klum Runway Projects Company rep

ID: 2535889 • Letter: 1

Question

1)Identify the amount of bad debts expense that Klum Runway Projects Company reported in its income statement for the year ended December 31, 2017: (2 points)

2) Provide the proper presentation of accounts receivable in the GAAP balance sheet of Klum Runway Projects Company at December 31, 2017 including the appropriate description and the amount reported: (2 points)

Part #2: Klum Runway Projects Company (10 points) Klum Runway Projects Company uses the allowance method to record bad debts expense and estimates that 1.40% of net sales will be uncollectible. The following information was gathered from the accounting records at December 31, 2017 PRIOR to the recording of the year-end adjustment for bad debts: (??? Cr- Dr. $240,000 $15,790 $15,620,000 Sales on credit Sales returns Accounts receivable Allowance for doubtful accounts $3,675,000 a. Prepare the adjusting entry required to record the provision for bad debts. (4 points) DATE ACCOUNT NAMES DEBIT CREDIT Supporting Computation Required:

Explanation / Answer

Answers

Sales on credit

$         156,20,000.00

Sales Return

$           (2,40,000.00)

Net Sales

$         153,80,000.00

Bad Debt Expenses (1.4% of net sales) = 15380000 x 1.4%

$              2,15,320.00

Date

Account Names

Debit

Credit

31-Dec-17

Bad Debt Expense

$              2,15,320.00

Allowance for Doubtful Accounts

$             2,15,320.00

(bad debt expense recorded)

Working

Allowances for Doubtful Debts

Unadjusted Balance - Credit (Debit)

$               (15,790.00)

Add: Bad Debt expense

$              2,15,320.00

Adjusted balance - Credit (Debit)

$              1,99,530.00

Balance Sheet presentation (Partial)

ASSETS

Current Assets:

Accounts receivables

$           36,75,000.00

Less: Allowances for Doubtful Accounts

$              1,99,530.00

Accounts receivables, net

$           34,75,470.00

Sales on credit

$         156,20,000.00

Sales Return

$           (2,40,000.00)

Net Sales

$         153,80,000.00

Bad Debt Expenses (1.4% of net sales) = 15380000 x 1.4%

$              2,15,320.00