Question: Swathmore Clothing Corporation grants its customers 30 days' credit. The company uses the allowance method for its uncollectable accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 3% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectable accounts is adjusted accordingly. At the end of 2015, accounts receivable were $574,000 and the allowance account had a credit balance of $54,000. Accounts receivable activity for 2016 was as follows: Beginning balance $574,000 Credit sales 2,620,000 Collections (2,483,000) Write-offs (68,000) Ending balance $643,000 The company's controller prepared the following aging summary of year-end accounts receivable: Summary Age Group Amount Percent Uncollectable 0-60 days 61-90 days 91-120 days Over 120 days $430,000 4% $98,000 15% $60,000 25% $55,000 40% $643,000 Total Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Question: Swathmore Clothing Corporation grants its customers 30 days' credit. The company uses the allowance method for its uncollectable accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 3% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectable accounts is adjusted accordingly. At the end of 2015, accounts receivable were $574,000 and the allowance account had a credit balance of $54,000. Accounts receivable activity for 2016 was as follows: Beginning balance $574,000 Credit sales 2,620,000 Collections (2,483,000) Write-offs (68,000) Ending balance $643,000 The company's controller prepared the following aging summary of year-end accounts receivable: Summary Age Group Amount Percent Uncollectable 0-60 days 61-90 days 91-120 days Over 120 days $430,000 4% $98,000 15% $60,000 25% $55,000 40% $643,000 Total Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question:
Swathmore Clothing Corporation grants its customers 30 days' credit.
The company uses the allowance method for its uncollectable accounts
receivable. During the year, a monthly bad debt accrual is made by
multiplying 3% times the amount of credit sales for the month. At the
fiscal year-end of December 31, an aging of accounts receivable
schedule is prepared and the allowance for uncollectable accounts is
adjusted accordingly. At the end of 2015, accounts receivable were
$574,000 and the allowance account had a credit balance of $54,000.
Accounts receivable activity for 2016 was as follows:
Beginning balance $574,000
Credit sales 2,620,000
Collections (2,483,000)
Write-offs (68,000)
Ending balance $643,000
The company's controller prepared the following aging summary of
year-end accounts receivable:
Summary Age Group Amount Percent Uncollectable
0-60 days
61-90 days
91-120 days
Over 120 days
$430,000 4%
$98,000 15%
$60,000 25%
$55,000 40%
$643,000
Total
Prepare a summary journal entry to record the monthly bad debt accrual
and the write-offs during the year. (If no entry is required for a
transaction/event, select "No journal entry required" in the first account
field.)
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