Colorado Rocky Cookie Company offers credit terms to its customers. At the end o
ID: 2490136 • Letter: C
Question
Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2013, accounts receivable totaled $680,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $43,000 at the beginning of 2013 and $26,500 in receivables were written off during the year as uncollectible. Also, $2,300 in cash was received in December from a customer whose account previously had been written off. The company estimates bad debts by applying a percentage of 10% to accounts receivable at the end of the year. Required: 1. Prepare journal entries to record the write-off of receivables, the collection of $2,300 for previously written off receivables, and the year-end adjusting entry for bad debt expense. (If no entry is required for a particular event, select "No journal entry required" in the first account field.)
1.
Record the write-off of receivables.
2.
Record the reinstatement of an account previously written off.
3.
Record collection of account previously written off.
4.
Record bad debt expense for the year.
How would accounts receivable be shown in the 2013 year-end balance sheet? Accounts Receivable?
Explanation / Answer
accounts receivable - end of 2013 680000 Allowance for uncollectible - opening 43000 less : write off during the year 26500 Add : reinstatement of account 2300 Less: allowance for uncollectibles - ending ( 10% of 680000) 68000 Additional allowance required -49200 Journal entry 1) Allowance for uncollectibles Dr 26500 Accounts receivable Cr 26500 ( To record write off of receivables) 2) Accounts receivable Dr 2300 Allowance for uncollectibles Cr 2300 3) Cash Dr 2300 Accounts receivable Cr 2300 ( To record cash received from debtor previously written off) 4) Bad Debts Dr 49200 Allowance for uncollectibles Cr 49200 ( To record year end adjusting entry for allowance) Accounts receivables - 2013 680000 Less : Allowance for uncollectibles 68000 Accounts receivable ( net) 612000