For its fiscal year ended December 31, 2023, Fruitful Products had credit sales of $750,000. At year end, the unadjusted trial balance shows a debit balance of $1,800 in the Allowance for Doubtful Accounts (AFDA), and $140,000 in Accounts Receivable. The credit manager prepared an aging schedule of accounts receivable and estimates that $5,155 will prove to be uncollectible. On March 4, 2024, the credit manager authorizes a write off of the $2,862 balance owed by Sand Beach. Instructions Credit sales: $750,000 Unadjusted AFDA at year end: $1,800 Accounts Receivable at year end: $140,000 Estimated uncollectible amount from aging schedule: $5,155 (a) Prepare the adjusting entry to record the estimated bad debt expenses for 2023. (b) Show the statement of financial position presentation of accounts receivable at December 31, 2023. (c) On March 4, 2024, before the write off, assume the balance of Accounts Receivable account is $175,000 and the balance of Allowance for Doubtful Accounts is a credit of $4,500. Record the entry to write off the Sand Beach account. Also, show the statement of financial position presentation of accounts receivable before and after the write off.

For its fiscal year ended December 31, 2023, Fruitful Products had credit sales of $750,000. At year end, the unadjusted trial balance shows a debit balance of $1,800 in the Allowance for Doubtful Accounts (AFDA), and $140,000 in Accounts Receivable. The credit manager prepared an aging schedule of accounts receivable and estimates that $5,155 will prove to be uncollectible. On March 4, 2024, the credit manager authorizes a write off of the $2,862 balance owed by Sand Beach. Instructions Credit sales: $750,000 Unadjusted AFDA at year end: $1,800 Accounts Receivable at year end: $140,000 Estimated uncollectible amount from aging schedule: $5,155 (a) Prepare the adjusting entry to record the estimated bad debt expenses for 2023. (b) Show the statement of financial position presentation of accounts receivable at December 31, 2023. (c) On March 4, 2024, before the write off, assume the balance of Accounts Receivable account is $175,000 and the balance of Allowance for Doubtful Accounts is a credit of $4,500. Record the entry to write off the Sand Beach account. Also, show the statement of financial position presentation of accounts receivable before and after the write off.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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One company has a credit balance of $1530 in its allowance for doubtful accounts before any adjustments are made at the end of the year. Based on review and aging of its accounts receivable at the end of the year, One company estimates that $1545 of its receivables are uncollectible. As a result it will debit Bad Debts Expense for what amount?
The company estimates future uncollectible accounts. The company determines $16,000 of accounts receivable on January 31 are past due, and 30% of these accounts are estimated to be uncollectible. The remaining accounts receivable on January 31 are not past due, and 4% of these accounts are estimated to be uncollectible. (Hint: Use the January 31 accounts receivable balance calculated in the general ledger.)
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