The balance sheet of Starsky Company at December 31, 2019, includes the following. Notes receivable $ 36,000 Accounts receivable 182,100 Less: Allowance for doubtful accounts 17,300 $200,800 Transactions in 2020 include the following. 1. Accounts receivable of $138,000 were collected including accounts of $60,000 on which 2% sales discounts were allowed. 2. $5,300 was received in payment of an account which was written off the books as worthless in 2019. 3. Customer accounts of $17,500 were written off during the year. 4. At year-end, Allowance for Doubtful Accounts was estimated to need a balance of $20,000. This estimate is based on an analysis of aged accounts receivable. Instructions Prepare all journal entries necessary to reflect the transactions above.
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 balance sheet of Starsky Company at December 31, 2019, includes the following.
| Notes receivable | $ 36,000 | |||
| Accounts receivable | 182,100 | |||
| Less: Allowance for doubtful accounts | 17,300 | $200,800 |
Transactions in 2020 include the following.
1. Accounts receivable of $138,000 were collected including accounts of $60,000 on which 2% sales discounts were allowed.
2. $5,300 was received in payment of an account which was written off the books as worthless in 2019.
3. Customer accounts of $17,500 were written off during the year.
4. At year-end, Allowance for Doubtful Accounts was estimated to need a balance of $20,000. This estimate is based on an analysis of aged accounts receivable.
Instructions
Prepare all
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