## Comprehensive ADA Transactions: 2020 and 2021### 2020 TransactionsABC Company began operations in 2020. The following transactions were recorded:1. $300,000 of credit sales2. $250,000 collected from customers on credit sales3. Wrote off a $2,000 receivable from NotGonnaPay, Inc., a customer who went bankrupt4. Estimated that 3% of its Accounts Receivable as of 12/31/20 will be uncollectable#### Required for 2020:- **Update T Accounts** for: - Cash - Accounts Receivable (A/R) - Sales - Bad Debt Expense - Allowance for Doubtful Accounts (ADA)- **Necessary Submission**: - Include your T Accounts in your PDF upload. - No work and no credit journals are strictly required but could be helpful.#### Questions:- **Accounts Receivable balance**: $ ______- **Allowance for Doubtful Accounts (ADA) balance**: $ ______- **Bad Debt Expense (BDE) balance**: $ ______### 2021 TransactionsUsing previous information from 2020, continue with the following 2021 transactions:5. $400,000 in credit sales6. Received $375,000 from credit customers7. Received $500 in settlement from the customer whose debt was written off in 2020 (NotGonnaPay, Inc.)8. Wrote off a $1,500 receivable from NoCash Customer, another bankrupt client9. Estimated that 4% of ending Accounts Receivable as of 12/31/21 will be uncollectable#### Required for 2021:- **Update T Accounts** for: - Cash - Accounts Receivable (A/R) - Sales - Bad Debt Expense - Allowance for Doubtful Accounts (ADA)- **Necessary Submission**: - Include your T Accounts in your PDF upload.#### Questions:- **Accounts Receivable balance**: $ ______- **Allowance for Doubtful Accounts (ADA) balance**: $ ______- **Bad Debt Expense (BDE) balance**: $ ______These transactions will guide you through updating your financial accounts and preparing for potential bad debt.

A ledger is a log or list of accounts that keep track of account transfers.

Using the information from 2020 for ABC Company and proceed into 2021. Update the TAccounts and answer the questions below. Label your entries with t appropriate transaction letter. Use the 2021 transactions: 5. $400,000 in credit sales 6. $375,000 payment received on credit sales (collected from AR customers) 7. Received $500 from the customer previously written off in #3 as a bankruptcy settlement. 8. Wrote off a $1,500 receivable from NoCash Customer, who went into bankrupt 9. At 12/31/21 ABC, Inc estimated 4% of its ending AR will be uncollectable. *** REQUIRED*** Update the TAccounts for: Cash, A/R, Sales, Bad Debt Expense, and ADA for the

Using the information from 2020 for ABC Company and proceed into 2021. Update the TAccounts and answer the questions below. Label your entries with t appropriate transaction letter. Use the 2021 transactions: 5. $400,000 in credit sales 6. $375,000 payment received on credit sales (collected from AR customers) 7. Received $500 from the customer previously written off in #3 as a bankruptcy settlement. 8. Wrote off a $1,500 receivable from NoCash Customer, who went into bankrupt 9. At 12/31/21 ABC, Inc estimated 4% of its ending AR will be uncollectable. * REQUIRED* Update the TAccounts for: Cash, A/R, Sales, Bad Debt Expense, and ADA for the

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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Concept explainers

Contingent Liabilities and Provisions

A contingent liability can be defined as a liability the occurrence of which is dependent upon the happening of an uncertain future event. It is generally recorded in the books only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly.

Question

## Comprehensive ADA Transactions: 2020 and 2021

### 2020 Transactions

ABC Company began operations in 2020. The following transactions were recorded:

1. $300,000 of credit sales
2. $250,000 collected from customers on credit sales
3. Wrote off a $2,000 receivable from NotGonnaPay, Inc., a customer who went bankrupt
4. Estimated that 3% of its Accounts Receivable as of 12/31/20 will be uncollectable

#### Required for 2020:

- **Update T Accounts** for:
- Cash
- Accounts Receivable (A/R)
- Sales
- Bad Debt Expense
- Allowance for Doubtful Accounts (ADA)

- **Necessary Submission**:
- Include your T Accounts in your PDF upload.
- No work and no credit journals are strictly required but could be helpful.

#### Questions:
- **Accounts Receivable balance**: $ ______
- **Allowance for Doubtful Accounts (ADA) balance**: $ ______
- **Bad Debt Expense (BDE) balance**: $ ______

### 2021 Transactions

Using previous information from 2020, continue with the following 2021 transactions:

5. $400,000 in credit sales
6. Received $375,000 from credit customers
7. Received $500 in settlement from the customer whose debt was written off in 2020 (NotGonnaPay, Inc.)
8. Wrote off a $1,500 receivable from NoCash Customer, another bankrupt client
9. Estimated that 4% of ending Accounts Receivable as of 12/31/21 will be uncollectable

#### Required for 2021:

- **Update T Accounts** for:
- Cash
- Accounts Receivable (A/R)
- Sales
- Bad Debt Expense
- Allowance for Doubtful Accounts (ADA)

- **Necessary Submission**:
- Include your T Accounts in your PDF upload.

#### Questions:
- **Accounts Receivable balance**: $ ______
- **Allowance for Doubtful Accounts (ADA) balance**: $ ______
- **Bad Debt Expense (BDE) balance**: $ ______

These transactions will guide you through updating your financial accounts and preparing for potential bad debt.

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Raintree Cosmetic Company sells its products to customers on a credit basis. An adjusting entry for bad debt expense is recorded only at December 31, the company's fiscal year-end. The 2023 balance sheet disclosed the following: Current assets: Receivables, net of allowance for uncollectible accounts of $50,000 During 2024, credit sales were $1,850,000, cash collections from customers $1,930,000, and $59,000 in accounts receivable were written off. In addition, $5,000 was collected from a customer whose account was written off in 2023. An aging of accounts receivable at December 31, 2024, reveals the following: Age Group 0-60 days 61-90 days 91-120 days Over 120 days Percentage of Year- End Receivables in Group 65% 15 15 5 Percent Uncollectible 4% 10 30 50 $ 532,000 Required: 1. Prepare summary journal entries to account for the 2024 write-offs and the collection of the receivable previously written off. 2. Prepare the year-end adjusting entry for bad debts according to each of the…
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