P7.5 (LO 3) (Bad-Debt Reporting) Presented below is information related to the Accounts Receivable accounts of Gulistan Inc. during the current year 2020. 1. An aging schedule of the accounts receivable as of December 31, 2020, is as follows. % to Be Applied after Net Debit Balance Correction Is Made Age Under 60 days $172,342 1% 60-90 days 136,490 3% 91-120 days 39,924* 6% Over 120 days 23,644 $3,700 definitely uncollectible; estimated remainder uncollectible is 25% $372,400 *The $3,240 write-off of receivables is related to the 91-to-120-day category. 2. The Accounts Receivable control account has a debit balance of $372,400 on December 31, 2020. 3. Two entries were made in the Bad Debt Expense account during the year: (1) a debit on December 31 for the amount credited to Allowance for Doubtful Accounts, and (2) a credit for $3,240 on November 3, 2020, and a debit to Allowance for Doubtful Accounts because of a bankruptcy. 4. Allowance for Doubtful Accounts is as follows for 2020. Allowance for Doubtful Accounts Uncollectible accounts Jan. 1 Beginning balance 8,750 Nov. 3 written off 3,240 Dec. 31 5% of $372,400 18,620 5. A credit balance exists in Accounts Receivable (60-90 days) of $4,840, which represents an advance on a sales contract. Instructions Assuming that the books have not been closed for 2020, make the necessary correcting entries.
P7.5 (LO 3) (Bad-Debt Reporting) Presented below is information related to the Accounts Receivable accounts of Gulistan Inc. during the current year 2020. 1. An aging schedule of the accounts receivable as of December 31, 2020, is as follows. % to Be Applied after Net Debit Balance Correction Is Made Age Under 60 days $172,342 1% 60-90 days 136,490 3% 91-120 days 39,924* 6% Over 120 days 23,644 $3,700 definitely uncollectible; estimated remainder uncollectible is 25% $372,400 *The $3,240 write-off of receivables is related to the 91-to-120-day category. 2. The Accounts Receivable control account has a debit balance of $372,400 on December 31, 2020. 3. Two entries were made in the Bad Debt Expense account during the year: (1) a debit on December 31 for the amount credited to Allowance for Doubtful Accounts, and (2) a credit for $3,240 on November 3, 2020, and a debit to Allowance for Doubtful Accounts because of a bankruptcy. 4. Allowance for Doubtful Accounts is as follows for 2020. Allowance for Doubtful Accounts Uncollectible accounts Jan. 1 Beginning balance 8,750 Nov. 3 written off 3,240 Dec. 31 5% of $372,400 18,620 5. A credit balance exists in Accounts Receivable (60-90 days) of $4,840, which represents an advance on a sales contract. Instructions Assuming that the books have not been closed for 2020, make the necessary correcting entries.
Chapter1: Financial Statements And Business Decisions
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there is the first and second part.
23 abril 3:36
Transcribed Image Text:P7.5 (LO 3) (Bad-Debt Reporting) Presented below is information related to the Accounts Receivable
accounts of Gulistan Inc. during the current year 2020.
1. An aging schedule of the accounts receivable as of December 31, 2020, is as follows.
% to Be Applied after
Net Debit Balance Correction Is Made
Age
Under 60 days $172,342
1%
60-90 days
136,490
3%
91-120 days
39,924*
6%
Over 120 days
23,644
$3,700 definitely uncollectible; estimated remainder
uncollectible is 25%
$372,400
*The $3,240 write-off of receivables is related to the 91-to-120-day category.
Transcribed Image Text:2. The Accounts Receivable control account has a debit balance of $372,400 on December 31, 2020.
3. Two entries were made in the Bad Debt Expense account during the year: (1) a debit on December
31 for the amount credited to Allowance for Doubtful Accounts, and (2) a credit for $3,240 on
November 3, 2020, and a debit to Allowance for Doubtful Accounts because of a bankruptcy.
4. Allowance for Doubtful Accounts is as follows for 2020.
Allowance for Doubtful Accounts
Uncollectible accounts
Jan. 1
Beginning balance
8,750
Nov. 3
written off
3,240
Dec. 31
5% of $372,400
18,620
5. A credit balance exists in Accounts Receivable (60-90 days) of $4,840, which represents an
advance on a sales contract.
Instructions
Assuming that the books have not been closed for 2020, make the necessary correcting entries.
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