Chapter 5, Problem 5.3ME

Mini-Exercise 5.3

LO 5

Accounts receivable, bad debts, credit sales, and cash collections analysis At the beginning of the year, accounts receivable were $72,000 and the allowance for bad debts was $5,750. During the year, sales (all on account) were $300,000, cash collections were $290,000, bad debts expense totaled $7,100, and $6,000 of accounts receivable were written off as bad debts.

Required:

Calculate the balances at the end of the year for the Accounts Receivable and Allowance for Bad Debts accounts. (Hint: Use T- accounts to analyze each of these accounts, plug in the amounts that you know, and solve for the ending balances.)