Show all calculations you used to arrive at your answers. Part A The Azurite Met
ID: 2462409 • Letter: S
Question
Show all calculations you used to arrive at your answers.
Part A
The Azurite Metal Company offers credit terms to its customers. At the end of 2015, accounts receivable totaled $2,223,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $68,000 at the beginning of 2015 and $46,200 in receivables was written off during the year as uncollectible. No previously written off receivables were collected. The company estimates bad debts by applying a percentage of 3% to accounts receivable at the end of the year.
Required:
1. Prepare journal entries to record the write-off of receivables and the year-end adjusting entry for bad debt expense.
2. How would accounts receivable be shown in the 2015 year-end balance sheet?
Explanation / Answer
1)Balance in allowance account before adjustment of bad debt expense = 68000 - 46200 = 21800
Balance estimated as uncollectible = 2223000 * .03 = 66690
2)Accounts receivable (gross) 2,223,000
Less:Allowance - 44890
Accounts receivable (net) 2,178,110
Date Account title debit credit 1 Allowance for uncollectible account 46200 Accounts receivable 46200 [receivable write off ] 2 Bad debt expense 44890 Allowance for uncolectible account [ 66690- 21800 ] 44890 [bad debt expense recognised]