The following are the receivables balances of Hendrix Company as of January 1, 2021 (the beginning of the fiscal year). Notes receivable $ 85,000 331,750 Accounts receivable Allowance for doubtful accounts Transactions during 2021 include the following: 1) Sales to customers of $2,017,800 were made during 2021. Customers have 60 days to pay for the product. 2) Accounts receivable of $1,942,000 were collected. 3) $7,000 was received in payment of an account which was written off the books as uncollectible during 2021. 4) Customer accounts of $30,200 were written off during 2021. 5) At year-end (December 31, 2021), an aging of the accounts receivable balance showed the following. Use the below information to record bad debt expense for 2021. Age Under 30 days 30-90 days 91-180 days 181-360 days Over 360 days Amount $169,250 100,000 16,700 (Credit balance) 55,900 38,200 14,000 Estimated % Uncollectible 0.8% 1.6 5.0 15.0 40.0 Instructions a) Prepare the necessary journal entries for the 2021 transactions in Items #1-5. b) Prepare the Receivables section of Hendrix's balance sheet as of December 31, 2021.
The following are the receivables balances of Hendrix Company as of January 1, 2021 (the beginning of the fiscal year). Notes receivable $ 85,000 331,750 Accounts receivable Allowance for doubtful accounts Transactions during 2021 include the following: 1) Sales to customers of $2,017,800 were made during 2021. Customers have 60 days to pay for the product. 2) Accounts receivable of $1,942,000 were collected. 3) $7,000 was received in payment of an account which was written off the books as uncollectible during 2021. 4) Customer accounts of $30,200 were written off during 2021. 5) At year-end (December 31, 2021), an aging of the accounts receivable balance showed the following. Use the below information to record bad debt expense for 2021. Age Under 30 days 30-90 days 91-180 days 181-360 days Over 360 days Amount $169,250 100,000 16,700 (Credit balance) 55,900 38,200 14,000 Estimated % Uncollectible 0.8% 1.6 5.0 15.0 40.0 Instructions a) Prepare the necessary journal entries for the 2021 transactions in Items #1-5. b) Prepare the Receivables section of Hendrix's balance sheet as of December 31, 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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
Transcribed Image Text:The following are the receivables balances of Hendrix Company as of January 1, 2021 (the beginning of the fiscal year).
$ 85,000
331,750
Notes receivable
Accounts receivable
Allowance for doubtful accounts
Transactions during 2021 include the following:
1) Sales to customers of $2,017,800 were made during 2021. Customers have 60 days to pay for the product.
2) Accounts receivable of $1,942,000 were collected.
3) $7,000 was received in payment of an account which was written off the books as uncollectible during 2021.
4) Customer accounts of $30,200 were written off during 2021.
16,700 (Credit balance)
5) At year-end (December 31, 2021), an aging of the accounts receivable balance showed the following. Use the
below information to record bad debt expense for 2021.
Age
Under 30 days
30-90 days
91-180 days
181-360 days
Over 360 days
Amount
$169,250
100,000
55,900
38,200
14,000
Estimated % Uncollectible
0.8%
1.6
5.0
15.0
40.0
SHA
Instructions
a) Prepare the necessary journal entries for the 2021 transactions in Items #1-5.
b) Prepare the Receivables section of Hendrix's balance sheet as of December 31, 2021.
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