Colorado Rocky Cookie Company offers credit terms to its customers. At the end o
ID: 2543069 • Letter: C
Question
Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2018, accounts receivable totaled $630,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $33,000 at the beginning of 2018 and $21,500 in receivables were written off during the year as uncollectible. Also, $1,300 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 $1,300 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 Required 2 How would accounts receivable be shown in the 2018 year-end balance sheet? Balance Sheet (Partial) Accounts receivable (net)Explanation / Answer
Solution 1:
Solution 2:
Journal Entries - Colorado Rockey Cookie Event Particulars Debit Credit 1 Allowance for Uncollectible Accounts Dr $21,500.00 To Accounts Receivables $21,500.00 (Being bad debts written off) 2 Accounts Receivables Dr $1,300.00 To Allowance for Uncollectible Accounts $1,300.00 (Being reinstatement of account previously written off) 3 Cash Dr $1,300.00 To Accounts Receivables $1,300.00 (Being cash received from debtors previously written off) 4 Bad debts expense Dr[($630,000*10%) + $21,500 - $33,000 - $1,300) $50,200.00 To Allowance for Uncollectible Accounts $50,200.00 (Being bad debts expense recorded for 2018)