Required: g. Adjusting entry on December 31, 2020, to estimate uncollectible accounts based on a rate of 2.5% of outstanding receivables. (Round your final answers to nearest whole dollar.) h. The December 31, 2020, balance in the Allowance for Doubtful Accounts. (Round your final answer to nearest whole dollar.) i. Show how accounts receivable should appear on the balance sheet on December 31, 2020. (Round your final answers to nearest whole dollar.)
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.
Reproduced below from Farthington Supply’s accounting records is the
General Ledger | |||
Accounts Receivable | |||
Dec. 31/19 Balance | 161,000 | 7,050 | Jan. 4/20 |
Credit sales in 2020 | ???? | ???? | Collections in 2020 |
14,500 | July 15/20 | ||
Dec. 31/20 Balance | ???? |
Allowance for Doubtful Accounts | |||
July 15/20 | 14,250 | 250 | Dec. 31/19 Balance |
???? | Dec. 31/20 | ||
???? | Dec. 31/20 Balance |
Accounts Receivable Subledger | |||
JenStar Company | |||
Dec. 31/19 Balance | 49,000 | ||
Nov. 15/20 | ???? |
49,000 |
Jan. 20/20 |
Dec. 31/20 Balance | 106,500 |
Indigo Developments | |||
Dec. 31/19 Balance | -0- | ||
Mar. 1/20 | 17,500 | 17,500 | Mar. 20/20 |
Nov. 28/20 | 40,500 | ||
Dec. 2/20 | 4,250 | ||
Dec. 31/20 Balance | 44,750 |
Lomas Industries | |||
Dec. 31/19 Balance | ???? | ||
7,050 | Jan. 4/20 | ||
???? | Jan. 7/20 | ||
Apr. 21/20 | 53,500 | 53,500 | May 5/20 |
Dec. 7/20 | 23,500 | ||
Dec. 31/20 Balance | 23,500 |
PDQ Servicing | |||
Dec. 31/19 Balance | 14,500 | ||
14,500 | July 15/20 | ||
Dec. 31/20 Balance | -0- |
During the year 2020, there were no recoveries of accounts previously written off. Only one account, that of PDQ Servicing, was identified as being uncollectible on July 15, 2020. On January 4, 2020, Farthington issued a $7,050 credit memo to Lomas Industries regarding damaged goods returned.
Required:
g.
h. The December 31, 2020, balance in the Allowance for Doubtful Accounts. (Round your final answer to nearest whole dollar.)
i. Show how accounts receivable should appear on the balance sheet on December 31, 2020. (Round your final answers to nearest whole dollar.)
Analyzing the accounts, determine the following amounts:
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