Question

During Burns Company's first year of operations, credit sales totaled $172,000 and collections on credit sales...

During Burns Company's first year of operations, credit sales totaled $172,000 and collections on credit sales totaled $121,000. Burns estimates that bad debt losses will be 2.0% of credit sales. By year-end, Burns had written off $460 of specific accounts as uncollectible.

Required:
1. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense.
2. Show the year-end balance sheet presentation for accounts receivable.

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Homework Answers

Answer #1
1
a Allowance for uncollectible accounts 460
           Accounts receivable 460
b Bad debt expense 3440 =172000*2%
        Allowance for uncollectible accounts 3440
2
Partial balance sheet
Accounts receivable 50540
Less: Allowance for uncollectible accounts 2980 47560
Workings:
Accounts receivable=172000-121000-460=$50540
Allowance for uncollectible accounts=3440-460=$2980
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