1. The following is information about Solveit Co.
Accounts receivable at 1/1/00 - $500,000 debit
Sales during 2000 (80% are credit sales) 6,000,000
Collections on account during 2000 (including collections on accounts
previously written off) - 4,650,000
Allowance for doubtful accounts at 1/1/00 - 60,000 credit
Accounts written off during 2000 - 55,000
Accounts recovered during 2000 - 3,000
a. Determine the entry to record bad debt expense at 12/31/00
based on the following independent scenarios
1. Uncollectible accounts are estimated
to be 1.5% of credit sales.
2. Based on an aging of accounts receivable
at 12/31/00, an allowance of $85,000 is considered appropriate.
b. Calculate the balance in accounts receivable at 12/31.
2. Determine the bad debt expense for 2000 for Whatisit Co. based on the following information:
Allowance for doubtful accounts 1/1 - $35,000 credit balance
Accounts written off during the year - 50,000
Recoveries during the year - 4,000
Allowance for doubtful accounts 12/31 - $40,000 credit balance