Colorado Rocky Cookie Company offers credit terms to its customers. At the end o
ID: 2491541 • Letter: C
Question
Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2013, accounts receivable totaled $725,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $52,000 at the beginning of 2013 and $31,000 in receivables were written off during the year as uncollectible. Also, $3,200 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.
Prepare journal entries to record the write-off of receivables, the collection of $3,200 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.
2. How would accounts receivable be shown in the 2013 year-end balance sheet?
Required:Explanation / Answer
journal entries in the books of Colorado Rocky Cookie Company: to record the write off of receivables: allowance for uncollected amount a/c ……………..dr 31000 To account receivable a/c………….. 31000 To record the reinstatement of an account previously written off: account receivable a/c ……………..dr 3200 To allowance for uncollected account 3200 To record the collection of account previously written off: cash a/c ………………………….dr 3200 To account receivable a/c…….. 3200 record bad debts expense for the year bad debts a/c………………dr 72500 To allowance for uncollected account 72500 extract of balance sheet current assests: account receivable: 725000 less: allowance for uncollected amount 31000 694000