[westindesgirl]

Current assets:
Receivables, net of allowance for uncollectible accounts of $30,000 $432,000

During 2009, credit sales were $1,750,000, cash collections from customers $1,830,000
and $35,000 in accounts receivables were written-off. In addition, $3,000 was collected
from a customer whose account was written off in 2008. An aging of accounts receivables
at December 31, 2009 listed above.

Required:

1. Prepare summary journal entries to account for the 2009 write-offs and the collection
of the receivables previously written off.

2. Prepare the year-end adjusting entry for bad debt according to each of the following situation:
a. Bad debt expense is estimated to be 3% of credit sales for the year

b. Bad debt expense is estimated by computing net realizable value of the receivables.
The allowance for uncollectible accounts is estimated to be 10% of the year-end
balance in accounts receivable.

c. Bad debt expense is estimated by computing net realizable value of the receivables
The allowance for uncollectible accounts is determined by an aging of accounts

3. For situations (s)-( c ) in requirement 2 above, what would be the net amount of accounts
receivable reported in the 2009 balance sheet?

[westindesgirl]

Problem:

Raintree Costmetic Company sells its products to customers on a credit basis.
An adjusting entry for bad debt expense is recorded only at December 31, the
company's fiscal year-end. The 2008 balance sheet disclosed the following:

Current assets:
Receivables, net of allowance for uncollectible accounts of $30,000 $432,000

During 2009, credit sales were $1,750,000, cash collections from customers $1,830,000
and $35,000 in accounts receivables were written-off. In addition, $3,000 was collected
from a customer whose account was written off in 2008. An aging of accounts receivables
at December 31, 2009 listed above.

Required:

1. Prepare summary journal entries to account for the 2009 write-offs and the collection
of the receivables previously written off.

2. Prepare the year-end adjusting entry for bad debt according to each of the following situation:
a. Bad debt expense is estimated to be 3% of credit sales for the year

b. Bad debt expense is estimated by computing net realizable value of the receivables.
The allowance for uncollectible accounts is estimated to be 10% of the year-end
balance in accounts receivable.

c. Bad debt expense is estimated by computing net realizable value of the receivables
The allowance for uncollectible accounts is determined by an aging of accounts

3. For situations (s)-( c ) in requirement 2 above, what would be the net amount of accounts
receivable reported in the 2009 balance sheet?