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Huge Hangnail Inc. generated $2.75 million in credit sales during the current year. The balance...

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Accounting

Huge Hangnail Inc. generated $2.75 million in credit sales during the current year. The balance of the allowance for doubtful accounts at December 31 is $2,500 debit. Accounts receivable at December 31 consists of the following:

Account Classification Amount Estimated Percentage Uncollectible

1-30 days $350,000 1.5%

31-60 days 180,000 3%

61-90 days 55,000 5%

Over 90 days 21,000 25%

Required: 1. Calculate and record the journal entry for bad debt expense for the current year using the aging of accounts receivable approach.

2. Huge Hangnail has decided to write off $15,000 of the accounts that were over 90 days old. Record the journal entry.

3. In proper presentation form, show how Accounts Receivable will appear on the December 31 Statement of Financial Position?

4. One of the customers whose $2,200 account was written off paid in full. Prepare the entries to record the recovery.

5. Considering all entries in this question, what is the new balance of Accounts Receivable on the Statement of Financial Position?

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