60.1K

Verified Solution

Link Copied!

Swiss Supplies showed the following selected adjusted balances at its December 31, 2019. year-end: Accounts Receivable Dec. 31/19 Balance 420,000 Allowance for Doubtful Accounts 19,200 Dec. 31/19 Balance During 2020, the following selected transactions occurred: a. Sales totalled $2,810,000, of which 25% were cash sales (cost of sales $1,813,000). b. Sales returns were $115,000, half regarding credit sales. The returned merchandise was scrapped. c. An account for $31,000 was recovered. d. Several accounts were written off: $33,000. e. Collections from credit customers totalled $1,770,000 (excluding the recovery in (c) above). Part A Required: 1. Journalize transactions (a) through (e). You may find it useful to post your entries to T-accounts for Accounts Receivable an Allowance for Doubtful Accounts. Answer is complete and correct. No General Journal Credit Transaction a(1) 1 Cash Accounts receivable Sales Dobit 702,500 2,107,500 >> 2,810,000 2 a(2) Cost of goods sold > 1,813,000 Answer is complete and correct. No General Journal Debit Credit Transaction a(1) 1 Cash Accounts receivable Sales OOO 702,500 2,107,500 2,810,000 (2 N a(2) Cost of goods sold Merchandise inventory 1,813,000 93 1,813,000 3 b 115,000 Sales retums and allowances Accounts receivable Cash >> 57,500 57,500 4 o(1) Accounts receivable 31,000 Allowance for doubtful accounts 31,000 . O 5 c(2) 31,000 Cash Accounts receivable 31,000 33,000 6 d Allowance for doubtful accounts Accounts receivable Ol 33,000 1,770,000 7 Cash Accounts receivable 1.770,000 27 Next > Part B Required: 2. Prepare the December 31, 2020, adjusting entry to estimate bad debts assuming that uncollectible accounts are estimated to be 1% of net credit sales. No Dato December 31 Answer is complete and correct. General Journal Bad debt expense Allowance for doubtful accounts Credit 1 Debit 20,500 20,500 3. Show how accounts receivable will appear on the December 31, 2020, balance sheet. Answer is complete and correct. Partial Balance Sheet Assets Current assets Accounts receivable $ Less: Allowance for doubtful accounts 667,000 37,700 s 629,300 4. What will bad debt expense be on the income statement for the year ended December 31, 2020? Bad dabt expense Answer is complete and correct. $ 20,500 Part C (independent of Part B) Required: 5. Prepare the December 31, 2020, adjusting entry to estimate bad debts assuming that uncollectible accounts are estimated to be 3% of outstanding receivables. Answer is complete but not entirely correct. No Date Credit Debit 16,975 1 Goneral Journal Bad debt expense Allowance for doubtful accounts Dec 31 >> 16.975 6. Show how accounts receivable will appear on the December 31, 2020, balance sheet. Answer is complete but not entirely correct. Partial Balance Sheet Assets Current assets: Accounts receivable $ 667,000 Less: Allowance for doubtful 37,210 $ 629,790 accounts 7. What will bad debt expense be on the income statement for the year ended December 31, 2020? Answer is complete but not entirely correct. Bad debt $ 20.010 expense

Answer & Explanation Solved by verified expert

See Answer