Exercise 711 Uncollectible accounts allowance method balance

Exercise 7-11 Uncollectible accounts; allowance method; balance sheet approach [L07-5,7.6 Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2018, accounts receivable totaled $6 70,000. The lowance method is used to account for uncollectible accounts. Th $41,000 at the beginning of 2018 and $25,500 in receivables were written was received in December from a customer whose account previously had been written off. The company estimates bad debts applying a percentage of 15% to accounts receivable at the end of the year. e allowance for uncollectible accounts had a credit balance of off during the year as uncollectible. Also, $2.100 in cash Required 1. Prepare journal entries to record the write-off of receivables, the collection of $2,100 for previously written off receivables, and the year-end adjusting entry for bad debt expense. 2. How would accounts receivable be shown in the 2018 year-end balance sheet? Complete this question by entering your answers in the tabs below bles, the collection of $2,100 for y written off rec and the year-end adjusting entry for bad debt expense. (If no entry is required for a transaction/event, select \"No journal entry required\" in the first account field.) View transaction list Journal entry worksheet Record the write-off of receivables Next

Solution

1) Journal entry Account titles & Explanations Debit Credit Allowance for uncollectible accounts 25,500 Account receivable 25,500 Account receivable 2,100 Allowance for uncollectible accounts 2,100 cash 2,100 Account receivable 2,100 Bad debts expense 82,900 Allowance for uncollectible accounts 82,900 Adjusting entry is calculated as follows: opening balance in allowance accounts 41,000 Written off during the year -25,500 Reinstated 2,100 Balance before adjustment 17,600 allowance required at year end (670,000*15%) 100500 Adjustment required for (100500-17600) 82,900 2) Balance sheet (Partial) Current assets Accounts receivable (net)        569500