Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is
Posted: Wed Mar 09, 2022 8:22 am
Raintree Cosmetic Company sells its products to customers on a
credit basis. An adjusting entry for bad debt expense is recorded
only at December 31, the company’s fiscal year-end. The 2020
balance sheet disclosed the following:
During 2021, credit sales were $1,785,000, cash collections from
customers $1,865,000, and $42,000 in accounts receivable were
written off. In addition, $3,700 was collected from a customer
whose account was written off in 2020. An aging of accounts
receivable at December 31, 2021, reveals the following:
Required:
1. Prepare summary journal entries to account
for the 2021 write-offs and the collection of the receivable
previously written off.
2. Prepare the year-end adjusting entry for
bad debts according to each of the following situations:
3. For situations (a)−(c) in requirement 2
above, what would be the net amount of accounts receivable reported
in the 2021 balance sheet?
credit basis. An adjusting entry for bad debt expense is recorded
only at December 31, the company’s fiscal year-end. The 2020
balance sheet disclosed the following:
During 2021, credit sales were $1,785,000, cash collections from
customers $1,865,000, and $42,000 in accounts receivable were
written off. In addition, $3,700 was collected from a customer
whose account was written off in 2020. An aging of accounts
receivable at December 31, 2021, reveals the following:
Required:
1. Prepare summary journal entries to account
for the 2021 write-offs and the collection of the receivable
previously written off.
2. Prepare the year-end adjusting entry for
bad debts according to each of the following situations:
3. For situations (a)−(c) in requirement 2
above, what would be the net amount of accounts receivable reported
in the 2021 balance sheet?