Answer:
1. 1. Dr Allowance for uncollectible accounts $21,000
Cr Accounts receivable $21,000
2. Dr Accounts receivable $1800
Cr Allowance for uncollectible accounts $1800
3. Dr Cash $1,200
Cr Accounts receivable $1,200
4. Dr Bad debt expense $50,300
Cr Allowance for uncollectible accounts $50,300
2.Current Assets
Accounts receivable (net) $562,500
Explanation:
1. Preparation of journal entries to record the write-off of receivables
1. Dr Allowance for uncollectible accounts $21,000
Cr Accounts receivable $21,000
(To record written off of accounts receivable)
2. Dr Accounts receivable $1800
Cr Allowance for uncollectible accounts $1800
(To record reinstatement of account previously written off)
3. Dr Cash $1,200
Cr Accounts receivable $1,200
(To record collection of account previously written off)
4. Dr Bad debt expense $50,300
Cr Allowance for uncollectible accounts $50,300
(To record bad debt expense for the year)
Working:
Estimated bad debts expense= $625,000*10%= $62,500
Bad debt expense for the year= $32,000-21000+1200-62,500= $50,300
2. Calculation to determine How would accounts receivable be shown in the 2016 year-end balance sheet
Using this formula
Accounts receivable (net) = Beginning balance-Estimated bad debts expense
Let plug in the formula
Accounts receivable (net)= $625,000-($625,000*10%)
Accounts receivable (net)=$625,000 -$62,500
Accounts receivable (net)=$562,500
Therefore the accounts receivable be shown in the 2016 year-end balance sheet as:
BALANCE SHEET (PARTIAL)
Current Assets
Accounts receivable (net) $562,500
