Johnson Company calculates its allowance for uncollectible accounts as 5% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of $13,000 at the beginning of 2021. No previously written-off accounts receivable were reinstated during 2021. At 12/31/2021, gross accounts receivable totaled $216,800, and prior to recording the adjusting entry to recognize bad debts expense for 2021, the allowance for uncollectible accounts had a debit balance of 23,800. Required: 1. What was the balance in gross accounts receivable as of 12/31/2020

Question

Business

Kaitlyn Lowe

19 February, 19:36

Johnson Company calculates its allowance for uncollectible accounts as 5% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of $13,000 at the beginning of 2021. No previously written-off accounts receivable were reinstated during 2021. At 12/31/2021, gross accounts receivable totaled $216,800, and prior to recording the adjusting entry to recognize bad debts expense for 2021, the allowance for uncollectible accounts had a debit balance of 23,800. Required: 1. What was the balance in gross accounts receivable as of 12/31/2020

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Rhys Greene · Answer 1

The balance in gross accounts receivable as of 12/31/2020 is $260,000

Explanation:

In order to calculate the balance in gross accounts receivable as of 12/31/2020 we would have to make the following calculation:

Gross accounts Receivable at 12/31/2020 = Allowance Account balance at beginning / 10%

Allowance Account balance at beginning=$13,000

Therefore, Gross accounts Receivable at 12/31/2020=$13,000 / 5%

Gross accounts Receivable at 12/31/2020=$260,000

The balance in gross accounts receivable as of 12/31/2020 is $260,000