Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt recorded only at December 31, the company's fiscal year-end. The 2020 balance sheet disclosed the following: схpense is Current assets: Receivables, net of allowance for uncollectible accounts of $45,000$ 507,000 During 2021, credit sales were $1,825,000, cash collections from customers $1,905,000, and $54,000 in accounts receivabl were written off. In addition, $4,500 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following: Percentage of Year-End Receivables in Group Uncollectible Percent Age Group 0-60 days 61–90 days 91–120 days Over 120 days 70% 5% 20 15 20 40 Required: 1. Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previously written off. 2. Prepare the year-end adjusting entry for bad debts according to each of the following situations: a) Record accounts receivable written off during the year 2021. b) Record entry to reinstate an account receivable previously written off. c) Record collection of an account receivable previously written off. d) Bad debt expense is estimated to be 4% of credit sales for the year. e) 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. ) 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 receivable. 3. For situations (a)-(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2021 balance sheet?
Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt recorded only at December 31, the company's fiscal year-end. The 2020 balance sheet disclosed the following: схpense is Current assets: Receivables, net of allowance for uncollectible accounts of $45,000$ 507,000 During 2021, credit sales were $1,825,000, cash collections from customers $1,905,000, and $54,000 in accounts receivabl were written off. In addition, $4,500 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following: Percentage of Year-End Receivables in Group Uncollectible Percent Age Group 0-60 days 61–90 days 91–120 days Over 120 days 70% 5% 20 15 20 40 Required: 1. Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previously written off. 2. Prepare the year-end adjusting entry for bad debts according to each of the following situations: a) Record accounts receivable written off during the year 2021. b) Record entry to reinstate an account receivable previously written off. c) Record collection of an account receivable previously written off. d) Bad debt expense is estimated to be 4% of credit sales for the year. e) 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. ) 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 receivable. 3. For situations (a)-(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2021 balance sheet?
Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt recorded only at December 31, the company's fiscal year-end. The 2020 balance sheet disclosed the following: схpense is Current assets: Receivables, net of allowance for uncollectible accounts of $45,000$ 507,000 During 2021, credit sales were $1,825,000, cash collections from customers $1,905,000, and $54,000 in accounts receivabl were written off. In addition, $4,500 was collected from a customer whose account was written off in 2020. An aging of accounts receivable at December 31, 2021, reveals the following: Percentage of Year-End Receivables in Group Uncollectible Percent Age Group 0-60 days 61–90 days 91–120 days Over 120 days 70% 5% 20 15 20 40 Required: 1. Prepare summary journal entries to account for the 2021 write-offs and the collection of the receivable previously written off. 2. Prepare the year-end adjusting entry for bad debts according to each of the following situations: a) Record accounts receivable written off during the year 2021. b) Record entry to reinstate an account receivable previously written off. c) Record collection of an account receivable previously written off. d) Bad debt expense is estimated to be 4% of credit sales for the year. e) 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. ) 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 receivable. 3. For situations (a)-(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the 2021 balance sheet?
What are the journal entries a-f and the effects on accounts receivable in the balance sheet for 2021?
Transcribed Image Text:Raintree Cosmetic 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 2020 balance sheet disclosed the following:
Current assets:
Receivables, net of allowance for uncollectible accounts of $45,000$ 507,000
During 2021, credit sales were $1,825,000, cash collections from customers $1,905,000, and $54,000 in accounts receivable
were written off. In addition, $4,500 was collected from a customer whose account was written off in 2020. An aging of
accounts receivable at December 31, 2021, reveals the following:
Percentage of Year-End
Percent
Age Group Receivables in Group Uncollectible
0-60 days
61–90 days
91–120 days
Over 120 days
70%
5%
20
15
20
40
Required:
1. Prepare summary journal entrics to account for the 2021 wzite-offs and the collection of the receivable previously
written off.
2. Prepare the year-end adjusting entry for bad debts according to each of the following situations:
a) Record accounts receivable written off during the year 2021.
b) Record entry to reinstate an account receivable previously written off.
c) Record collection of an account receivable previously written off.
d) Bad debt expense is estimated to be 4% of credit sales for the year.
e) 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.
f) 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 reccivable.
3. For situations (a)-(c) in requirement 2 above, what would be the net amount of accounts receivable reported in the
2021 balance sheet?
Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.
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