Accounts Receivable $67,000 Allowance for Doubtful Accounts 1,300 (credit) During 2016, sales on credit amounted to $582,000, $552,800 was collected on outstanding receivables and $2,600 of receivables were written off as uncollectible. On December 31, 2016, Shelton estimates its bad debts to be 4% of the outstanding gross accounts receivable balance. Required: 1. Prepare the journal entry necessary to record Shelton’s estimate of bad debt expense for 2016. 2. Prepare the Accounts Receivable section of Shelton’s December 31, 2016, balance sheet. 3. Compute Shelton’s receivables turnover. (Round to one decimal place.)
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.
| $67,000 | ||
| Allowance for Doubtful Accounts | 1,300 | (credit) |
| Required: | |
| 1. | Prepare the |
| 2. | Prepare the Accounts Receivable section of Shelton’s December 31, 2016, |
| 3. | Compute Shelton’s receivables turnover. (Round to one decimal place.) |
| 4. | If Sheldon uses IFRS, what might be the heading for the accounts receivable section in Requirement 2? |
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