Response to the following problem:
Swathmore Clothing Corporation grants its customers 30 days' credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 3% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly.
At the end of 2012, accounts receivable were $586,000 and the allowance account had a credit balance of $50,000. Accounts receivable activity for 2013 was as follows:
|
Beginning balance
|
$586,000
|
|
Credit sales
|
2,680,000
|
|
Collections
|
(2,543,000)
|
|
Write-offs
|
(45,000)
|
|
Ending balance
|
$678,000
|
The company's controller prepared the following aging summary of year-end accounts receivable:
|
Summary
|
|
Age Group
|
Amount
|
Percent Uncollectible
|
|
0'60 days
|
$400,000
|
4
|
%
|
|
61'90 days
|
95,000
|
15
|
|
|
91'120 days
|
55,000
|
25
|
|
|
Over 120 days
|
128,000
|
36
|
|
|
Total
|
$678,000
|
|
|
Required:
1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year. (If no entry is required for a particular event, select "No journal entry required" in the first account field.)
· Record monthly bad debt expense accrual summary.
· Record year 2013 accounts receivable write-offs.
Prepare the necessary year-end adjusting entry for bad debt expense. (If no entry is required for an event, select "No journal entry required" in the first account field.)
Record the year-end adjusting entry for bad debt expense.
What is total bad debt expense for 2013?
Calculate the amount of accounts receivable that would appear in the 2013 balance sheet?