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Question: slide 16 problem 11 swathmore clothing corporation grants its...

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Slide 16 – problem 11

Swathmore Clothing Corporation grants its customers 30 days’ credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 2% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly.

At the end of 2017, accounts receivable were $612,000 and the allowance account had a credit balance of $76,000. Accounts receivable activity for 2018 was as follows:

Beginning balance                  $     612,000

     Credit sales                             2,810,000

     Collections                            (2,673,000)

      Write-offs                                  (58,000)

The company’s controller prepared the following aging summary of year-end accounts receivable:

                                                                            Summary___________________

Age Group                                     Amount                    Percent Uncollectible

0-60 days                                   $465,000                                      5 %

61-90 days                                     80,000                                    10%

91-120 days                                   68,000                                   27%

Over 120 days                               78,000                                     35%

   Total                                        $691,000

                                                 Required:

  1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year.
  2. Prepare the necessary year-end adjusting entry for bad debt expense.
  3. a. What is total bad debt expense for 2018? b.   How would accounts receivable appear in the 2018 balance sheet

Complete this question by entering your answers in the spaces below.

  1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field

Journal entry worksheet

               Record a summary entry to record the monthly bad debt accrual.

               Record a summary entry to record the 2018 write offs.

                Record the year-end adjusting entry for bad debt expense.

                        Note: enter debits before credits

Event

                   General Journal

Debit

Credit

1

                                                                                                Summary                                                  

Age Group                                                    Amount                                Percent Uncollectible   

0-60 days                                                  $465,000                                                5 %

61-90 days                                                    80,000                                               10  

91-120 days                                                  68,000                                              27

Over 120 days                                              78,000                                               35

        Total                                                    $691,000

Required:

  1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year.
  2. Prepare the necessary year-end adjusting entry for bad debt expense
  1. a. what is total bad debt expense for 2018?   b. How would accounts receivable appear in the 2018 balance sheet?

Complete this question by entering your answers in the spaces below.

What is total bad debt expense for 2018?

Bad debt expense____________________

                                                                                    

Complete this question by entering your answers in the spaces below.

How would accounts receivable appear in the 2018 balance sheet?

Balance Sheet (partial)

Current assets

Accounts receivable (net)

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