Prepare the journal entry to estimate bad debt expense assuming: The company uses the % of sales method The company uses the % of A/R method The company uses the aging of A/R method Prepare the journal entry to write off $1,200 A/R from Grant Company on March 2, 2020. Prepare the journal entries to record collection of $500 from Gr ant Company on June 5, 2020.
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.
Accounts Receivable Allowance Methods
Marion Company had sales revenue of $750,000 in 2019. Allowance for
December 31, 2019 Age of Accounts
|
Accounts Receivable |
1-30 Days |
31-60 Days |
61-90 Days |
Over 90 Days |
|
108,000 |
62,000 |
30,000 |
12,000 |
4,000 |
|
Estimated % Uncollectible |
0.5% |
5% |
16% |
55% |
|
|
|
|
|
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- Prepare the
journal entry to estimate bad debt expense assuming:- The company uses the % of sales method
- The company uses the % of A/R method
- The company uses the aging of A/R method
- Prepare the journal entry to write off $1,200 A/R from Grant Company on March 2, 2020.
- Prepare the journal entries to record collection of $500 from Gr ant Company on June 5, 2020.
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