Ask Question
19 October, 11:22

On January 1, 2019, Smith, Inc., has the following balances for accounts receivable and allowance for doubtful accounts: Accounts Receivable $386,000 Allowance for Doubtful Accounts (a credit balance) 4,500 During 2019, Smith had $2,895,000 of credit sales, collected $2,905,000 of accounts receivable, and wrote off $3,850 of accounts receivable as uncollectible. At year end, Smith performs an aging of its accounts receivable balance and estimates that $3,800 will be uncollectible. Required:

1. Calculate Smith's preadjustment balance in accounts receivable on December 31, 2019.

2. Calculate Smith's preadjustment balance in allowance for doubtful accounts on December 31, 2019.

3. Prepare the necessary adjusting entry for 2019.

+2
Answers (1)
  1. 19 October, 11:45
    0
    1. $372,150

    2. $650

    Explanation:

    1. Smith's preadjustment balance in accounts receivable on December 31, 2019:

    = Accounts Receivable on January 1, 2019 + Credit sales - Collected accounts receivable - uncollectible accounts receivable

    = $386,000 + $2,895,000 - $2,905,000 - $3,850

    = $372,150

    2. Smith's preadjustment balance in allowance for doubtful accounts on December 31, 2019:

    = Allowance for Doubtful Accounts (a credit balance) on January 1, 2019 - uncollectible accounts receivable

    = $4,500 - $3,850

    = $650

    3. The Journal entry is as follows:

    Bad Debt Expense ($3,800 - $650) A/c Dr. $3,150

    To Allowance for Doubtful Accounts $3,150

    (Record adjusting entry for bad debt expense estimate)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “On January 1, 2019, Smith, Inc., has the following balances for accounts receivable and allowance for doubtful accounts: Accounts ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers