Assignment- Accounts receivable and estimating bad debt expense
Rollins' Bicycles has the following information available for the current year:
Beginning balance in accounts recevable: $52,927.00
Beginning balance in allowance for bad debts: $3,425.00 Credit 6
Total sales for period (cash and credit) $290,236.00
Sales on account for period $243,559.00
Sales for cash during period $46,677.00
Cash collected on account during the period $115,847.00
Write-offs of uncollectible receivables for period $1,370.00
Required - Part 1 (Allowance method - percent of sales):
1. Post the beginning balances to the accounts receivable and allowance for bad debts T-accounts
2. Journalize the transaction to record cash and credit sales for the period. Ignore the entry for cost of merchandise sold (entry 1)
3. Journalize the transaction to record cash collections on account for the period (entry 2)
4. Journalize the transaction to record write-offs of bad debts for the period (entry 3)
5. Post transactions 1, 2, and 3 to the accounts receivable and allowance for bad debts T-accounts
6. Journalize the adjusting entry for bad debt expense at the end of the period (entry 4)
We calculate bad debts expense using the allowance method (percent of credit sales)
We estimate bad debts to be: 4.00% of credit sales
7. Post the adjusting entry (entry 4) to the allowance for bad debts T-account
Required - Part 2 (Allowance method - percent of receivable):
1. Post the beginning balances to the accounts receivable and allowance for bad debts T-accounts
2. Journalize the transaction to record cash and credit sales for the period. Ignore the entry for cost of merchandise sold (entry 1)
3. Journalize the transaction to record cash collections on account for the period (entry 2)
4. Journalize the transaction to record write-offs of bad debts for the period (entry 3)
5. Post transactions 1, 2, and 3 to the Accounts Receivable and Allowance for Bad Debts T-accounts
6. Journalize the adjusting entry for bad debt expense at the end of the period (entry 4)
We calculate bad debts expense using the allowance method (percent of receivables)
We estimate bad debts as: 1.00% of receivables
7. Post the adjusting entry (entry 4) to the allowance for bad debts T-account.