At the end of 2023, accounts receivable were $610,000 and the allowance account had a credi receivable activity for 2024 was as follows: Beginning balance. Credit sales Collections Write-offs $ 610,000 2,800,000 (2,663,000) (57,000) $ 690,000 The company's controller prepared the following aging summary of year-end accounts receival Ending balance Summary
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.
![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 2023, accounts receivable were $610,000 and the allowance account had a credit balance of $74,000. Accounts
receivable activity for 2024 was as follows:
Beginning balance
Credit sales
Collections
Write-offs
Ending balance
The company's controller prepared the following aging summary of year-end accounts receivable:
Summary
Age Group
$ 610,000
2,800,000
(2,663,000)
(57,000)
$ 690,000
0-60 days
61-90 days
91-120 days
over 120 days
Total
Amount
$ 460,000
78,000
67,000
85,000
$ 690,000
Percent
Uncollectible
44
15
26
41
Required:
1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the bear.
2. Prepare the necessary year-end adjusting entry for bad debt expense.
3-a. What is total bad debt expense for 20247
3-b. How would accounts receivable appear in the 2024 balance sheet?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fecf0700a-c30a-46a3-a181-9e66191e2d93%2F93fa2fa6-4f54-402a-8987-a6ce804781cb%2Fidz0o8t_processed.jpeg&w=3840&q=75)
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