Bridgeport Corp.’s unadjusted trial balance at December 1, 2017, is presented below. Debit Credit Cash $26,900 Accounts Receivable 35,500 Notes Receivable
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.
Bridgeport Corp.’s unadjusted
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Debit
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Credit
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| Cash | $26,900 | ||
| 35,500 | |||
| Notes Receivable | 9,500 | ||
| Interest Receivable | 0 | ||
| Inventory | 36,170 | ||
| Prepaid Insurance | 3,900 | ||
| Land | 21,500 | ||
| Buildings | 163,800 | ||
| Equipment | 60,000 | ||
| Patent | 9,810 | ||
| Allowance for Doubtful Accounts | $600 | ||
| 54,600 | |||
| Accumulated Depreciation—Equipment | 24,000 | ||
| Accounts Payable | 27,200 | ||
| Salaries and Wages Payable | 0 | ||
| Notes Payable (due April 30, 2018) | 11,900 | ||
| Income Taxes Payable | 0 | ||
| Interest Payable | 0 | ||
| Notes Payable (due in 2023) | 35,900 | ||
| Common Stock | 51,600 | ||
| 69,080 | |||
| Dividends | 13,500 | ||
| Sales Revenue | 911,500 | ||
| Interest Revenue | 0 | ||
| Gain on Disposal of Plant Assets | 0 | ||
| 0 | |||
| Cost of Goods Sold | 635,000 | ||
| Depreciation Expense | 0 | ||
| Income Tax Expense | 0 | ||
| Insurance Expense | 0 | ||
| Interest Expense | 0 | ||
| Other Operating Expenses | 61,800 | ||
| Amortization Expense | 0 | ||
| Salaries and Wages Expense | 109,000 | ||
| Total | $1,186,380 | $1,186,380 |
The following transactions occurred during December.
| Dec. 2 | Purchased equipment for $15,600, plus sales taxes of $1,800 (paid in cash). | |
| 2 | Bridgeport sold for $3,550 equipment which originally cost $4,900. Accumulated depreciation on this equipment at January 1, 2017, was $1,950; 2017 depreciation prior to the sale of equipment was $400. | |
| 15 | Bridgeport sold for $5,250 on account inventory that cost $3,470. | |
| 23 | Salaries and wages of $6,420 were paid. |
Adjustment data:
| 1. | Bridgeport estimates that uncollectible accounts receivable at year-end are $4,020. | |
| 2. | The note receivable is a one-year, 8% note dated April 1, 2017. No interest has been recorded. | |
| 3. | The balance in prepaid insurance represents payment of a $3,900, 6-month premium on September 1, 2017. | |
| 4. | The building is being |
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| 5. | The equipment owned prior to this year is being depreciated using the straight-line method over 5 years. The salvage value is 10% of cost. | |
| 6. | The equipment purchased on December 2, 2017, is being depreciated using the straight-line method over 5 years, with a salvage value of $2,160. | |
| 7. | The patent was acquired on January 1, 2017, and has a useful life of 9 years from that date. | |
| 8. | Unpaid salaries at December 31, 2017, total $2,080. | |
| 9. | Both the short-term and long-term notes payable are dated January 1, 2017, and carry a 10% interest rate. All interest is payable in the next 12 months. | |
| 10 | Income tax expense was $14,400. It was unpaid at December 31. |
Prepare an adjusted trial balance at December 31, 2017.
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BRIDGEPORT CORP.
Adjusted Trial Balance |
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Credit
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$
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$
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| Totals |
$
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$
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