Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2021, net credit sales totaled $6,500,000, and the estimated bad debt percentage is 1.50% No previously written-off accounts receivable were reinstated during 2021. The allowance for uncollectible accounts had a credit balance of $62,000 at the beginning of 2021 and $50,000, after adjusting entries, at the end of 2021. Required: 1. What is bad debt expense for 2021 as a percent of net credit sales? 2. Assume Ervin makes no other adjustment of bad debt expense during 2021. Determine the amount of accounts receivable written off during 2021. 3. If the company uses the direct write-off method, what would bad debt expense be for 2021? 1 2 3. Bad debt expense Accounts receivable written off Bad debt expense
Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2021, net credit sales totaled $6,500,000, and the estimated bad debt percentage is 1.50% No previously written-off accounts receivable were reinstated during 2021. The allowance for uncollectible accounts had a credit balance of $62,000 at the beginning of 2021 and $50,000, after adjusting entries, at the end of 2021. Required: 1. What is bad debt expense for 2021 as a percent of net credit sales? 2. Assume Ervin makes no other adjustment of bad debt expense during 2021. Determine the amount of accounts receivable written off during 2021. 3. If the company uses the direct write-off method, what would bad debt expense be for 2021? 1 2 3. Bad debt expense Accounts receivable written off Bad debt expense
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Question
Please help me
Transcribed Image Text:Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a
percentage of credit sales. For 2021, net credit sales totaled $6,500,000, and the estimated bad debt percentage is 1.50% No
previously written-off accounts receivable were reinstated during 2021. The allowance for uncollectible accounts had a credit balance
of $62,000 at the beginning of 2021 and $50,000, after adjusting entries, at the end of 2021.
Required:
1. What is bad debt expense for 2021 as a percent of net credit sales?
2. Assume Ervin makes no other adjustment of bad debt expense during 2021. Determine the amount of accounts receivable written
off during 2021.
3. If the company uses the direct write-off method, what would bad debt expense be for 2021?
1
2
3.
Bad debt expense
Accounts receivable written off
Bad debt expense
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education