Colorado Rocky Cookie Company offers credit terms to its customers. At the end o
ID: 2520306 • Letter: C
Question
Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2018, accounts receivable totaled $655,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $38,000 at the beginning of 2018 and $24,000 in receivables were written off during the year as uncollectible. Also, $1,800 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 15% to accounts receivable at the end of the year. Required: 1. Prepare journal entries to record the write-off of receivables, the collection of $1,800 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. Required 1 Required 2 Prepare journal entries to record the write-off of receivables, the collection of $1,800 for previously written off receivables 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. Note: Enter debits before credits. Debit Credit Event General Journal Record entry Clear entry View general journalExplanation / Answer
Q1. Jounal entries: Event Accounts title and explanations Debit $ Credit $ a. Allowance for uncollectibles account Dr. 24,000 Accounts receivable 24,000 b. Accounts receivable Dr. 1800 Allowance for uncollectible account 1800 Cash Account Dr. 1800 Accounts receivable 1800 c. Bad debts expense Dr. 82450 Allowance for uncollectible account 82450 Note: Bad debts expense: Allowance account in the beginning 38000 Add: Reinstated 1800 Less: write off 24000 Allowance balance exist 15800 Required balance (15% 655000) 98250 Bad debts expense 82450 Q2. Net realizable value of Accounts receivable: Accounts receivable (Gross) 655000 Less: Allowance for uncollectible accounts 98250 Accounts receivable (Net) 556750