he December 31,2020 balance sheet of a company showed account receivable of 480,000 and an allowance for double full accounts balance of 20,000(credit balance) the following transactions occurred during 2021 1) sales of 6,000,000 (5,500,000 on account plus cash sales of 500,000) 2) Sales returns and allowances $0 3) Normal collections on account 5,380,000 4) Accounts written off 20,000 5) Previously written off account of 1,000 were recovered (collection) REQUIRED: 1) Show how accounts receivable would be presented on a balance sheet at December 31, 2020 (disclose gross. Allowance and net realized value) 2) Journalize all 2021 transactions effecting accounts receivable or the allowance account 3) Prepare t-accounts for accounts receivable and allowance for double-full accounts and post the current year transactions indicate the ‘’unadjusted’’ year-end balance 4) Using the percentage of receivables basis to estimate bad debt expense and assuming they estimate that uncollectible accounts will be 4% of accounts receivable 1) Write the adjusting journal entry required at December 31,2021 2) What will allowance for double full accounts be on December 31,2021 balance sheet? 3) What will be debts expense is for 2021? 5)calculate accounts receivable turnover and average collection period for 202
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
The December 31,2020 balance sheet of a company showed account receivable of 480,000 and an allowance for double full accounts balance of 20,000(credit balance) the following transactions occurred during 2021 1) sales of 6,000,000 (5,500,000 on account plus cash sales of 500,000) 2) Sales returns and allowances $0 3) Normal collections on account 5,380,000 4) Accounts written off 20,000 5) Previously written off account of 1,000 were recovered (collection) REQUIRED: 1) Show how accounts receivable would be presented on a balance sheet at December 31, 2020 (disclose gross. Allowance and net realized value) 2) Journalize all 2021 transactions effecting accounts receivable or the allowance account 3) Prepare t-accounts for accounts receivable and allowance for double-full accounts and post the current year transactions indicate the ‘’unadjusted’’ year-end balance 4) Using the percentage of receivables basis to estimate
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