Accounting Test No BD 1 : Accounts Receivable And Bad Debts

Question No BD 1:

Company XYZ offers credit terms to its customers. At 31/12/2005, accounts receivable totaled $2,500,000. The allowance method is used to account for uncollectible accounts. At the beginning of the year, the allowance for uncollectible accounts had a credit balance of $68,000. $64,000 Accounts receivable written off during the year. No previously written off receivables were collected. The company estimates bad debts by applying a percentage of 2% to accounts receivable at the end of the year.

Required:

a. Prepare journal entries to record the write off of accounts receivables and the year end adjusting entry for bad debt expense.

1. How would accounts receivable be shown in the 2005 year end balance sheet?

[ Refer Answer ]