Question

# Johnson Company calculates its allowance for uncollectible accounts as 10% of its ending balance in gross...

Johnson Company calculates its allowance for uncollectible accounts as 10% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of \$22,000 at the beginning of 2021. No previously written-off accounts receivable were reinstated during 2021. At 12/31/2021, gross accounts receivable totaled \$366,700, and prior to recording the adjusting entry to recognize bad debts expense for 2021, the allowance for uncollectible accounts had a debit balance of 40,300.

Required:
1.
What was the balance in gross accounts receivable as of 12/31/2020?
2. What journal entry should Johnson record to recognize bad debt expense for 2021?
3. Assume Johnson made no other adjustment of the allowance for uncollectible accounts during 2021. Determine the amount of accounts receivable written off during 2021.
4. If Johnson instead used the direct write-off method, what would bad debt expense be for 2021?

What was the balance in gross accounts receivable as of 12/31/2020?

 Balance in gross accounts receivable

Journal entry worksheet

• Record the entry to recognize bad debt expense for 2021.

Note: Enter debits before credits.

Year General Journal Debit Credit
2021
 Amount of accounts receivable written off

1.

 allowance account at the beginning of 2021. 22000 Divided by: % of ending accounts receivable 10% balance in gross accounts receivable as of 12/31/2020 220000

2.

 Date General Journal Debit Credit 31-Dec-21 Bad debt expense (366700*10% + 40300) 76970 Allowance for uncollectible accounts 76970

3.

 Allowance account at the beginning of 2021. 22000 Less: Unadjusted Allowance account at the end -40300 Accounts receivable written off 62300

4.

 If Direct method: bad debt expense be for 2021 62300

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