Cumber Ltd. has been in business for several years and has the following information for its operation which ended December 31, 2024: 1 2 3 4 Total sales for the year were $3.490.000, of which 60% were on account The company estimates that total expected credit losses at December 31, 2024 will be $94,230 Cullumber Ltd. began the year with $650,000 in accounts receivable and a normal credit to the allowance for expected credit losses of $67,000 Cullumber Ltd. writes off customer accounts that have been outstanding for more than 120 days. During the year, accounts with a carrying amount of $72.000 reached the 120-day mark and were written off The company uses a collection agency to try to collect accounts that have been written oft. The collection agency was able to collect $22.000 from customers whose accounts had previously been written off During the year the company collected $1,770,000 of its accounts receivatde
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.
![Cullumber Ltd has been in business for several years and has the following information for its operations which ended December 31,
2024:
1
2
3
4
5
6.
Total sales for the year were $3,490,000, of which 60% were on account
The company estimates that total expected credit losses at December 31, 2024 will be $94,230
Cullumber Ltd. began the year with $650,000 in accounts receivable and a normal credit to the allowance for expected credit
losses of $67,000
Cullumber Ltd. writes off customer accounts that have been outstanding for more than 120 days During the year, accounts
with a carrying amount of $72,000 reached the 120-day mark and were written off
The company uses a collection agency to try to collect accounts that have been written off. The collection agency was able to
collect $22.000 from customers whose accounts had previously been written off
During the year the company collected $1,770,000 of its accounts receivable.
Prepare a summary journal entry for the credit sales and journal entries to record the above transactions on the books of
Cullumber Ltd. on December 31, 2024. (Credit account titles are automatically indented when amount is entered. Do not indent
manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts. List all debit entries before credit
entries)
Account Titles and Explanation
Accounts Receivable
Sales Revenue
(To record credit sales)
Credit Losses
Allowance for Expected Credit Losses
(To recognize the credit losses)
(To recognize the credit losses)
Allowance for Expected CreditLosses
Accounts Receivable
(To write off accounts judged uncollectible)
Accounts Receivable
Allowance for Expected Credit tosses
(To reinstate an account that was previously
written off)
Cash
Accounts Receivable
(To record subsequent collection of accounts
that were previously written off)
Cash
Accounts receivable
Debit
Allowance for expected credit losses $
902000
2094000
111230
94200
72000
22000
22000
Accounts Receivable
Calculate the Dec 31, 2024 balances for Accounts receivable and the Allowance for Expected Credit Losses
1770000
Credit
IN DO
209 4000
94230
72000
22000
22000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F393f50af-cc90-4d35-ab26-4795788cf06f%2F430ca511-7567-4ab1-9587-e825d1fabc69%2F910zfec_processed.jpeg&w=3840&q=75)
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