Country Store, Inc. provides credit to their favorite customers. On December 31, 2018, the controller of Country Store prepared the following “aging of receivables”: Days Outstanding Amount Uncollectible % Not Yet Due $ 50,000 3.0 % 0 – 60 Days Past Due 20,000 5.0 % > 60 Days Past Due 10,000 20.0 % On January 1, 2018, the balance in “Allowance for Doubtful Accounts” was $ 3,000. During the year, Country Store “wrote-off” accounts in the amount of $ 4,000. Country Store made no collections on accounts that had previously been “written-off”, and no “provisions for bad debts” were made during the year. (1) What is the desired balance in the “Allowance for Doubtful Accounts” On December 31, 2018? (1) Given your answer to Part A, what is the appropriate Adjusting Entry to record “Bad Debt Expense” for the year-ending December 31, 2018?
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.
Country Store, Inc. provides credit to their favorite customers. On December 31, 2018, the controller of Country Store prepared the following “aging of receivables”:
Days Outstanding Amount Uncollectible %
Not Yet Due $ 50,000 3.0 %
0 – 60 Days Past Due 20,000 5.0 %
> 60 Days Past Due 10,000 20.0 %
On January 1, 2018, the balance in “Allowance for Doubtful Accounts” was
$ 3,000. During the year, Country Store “wrote-off” accounts in the amount of $ 4,000.
Country Store made no collections on accounts that had previously been “written-off”, and no “provisions for
- (1) What is the desired balance in the “Allowance for Doubtful Accounts”
On December 31, 2018?
- (1) Given your answer to Part A, what is the appropriate
Adjusting Entry to record
“Bad Debt Expense” for the year-ending December 31, 2018?
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