Platinum Pools Company has the following information on its 2013comparative Balance Sheet:
2013
2012
Accounts Receivable (less allowances for doubtful accounts of$14,000 in 2013 and $17,500 in 2012)
$958,000
$1,027,000
Additional information: During 2013, Platinum wrote-off $20,000of accounts that had been identified as uncollectible. All Platinumsales were credit sales in 2013. Platinum collected $2,500,000 fromcustomers in 2013.
a. Provide the journal entry that Platinum made during 2013 torecord the write-off.
Account name
Debit
Credit
b. What is the amount of Platinumâs 2013 credit sales?
2013 Credit Sales
c. What is the amount that Platinum recorded as bad debt expenseon its 2013 income statement?
2013 Bad debt expense
d. Assuming Platinum used a balance sheet approach with a singlebad debt rate (rather than multiple rates from aging specificreceivables) in estimating bad debt expense, what is the bad debtrate applied in 2013?
2013 debt rate
Platinum Pools Company has the following information on its 2013comparative Balance Sheet:
2013 | 2012 | |
Accounts Receivable (less allowances for doubtful accounts of$14,000 in 2013 and $17,500 in 2012) | $958,000 | $1,027,000 |
Additional information: During 2013, Platinum wrote-off $20,000of accounts that had been identified as uncollectible. All Platinumsales were credit sales in 2013. Platinum collected $2,500,000 fromcustomers in 2013.
a. Provide the journal entry that Platinum made during 2013 torecord the write-off.
Account name | Debit | Credit |
b. What is the amount of Platinumâs 2013 credit sales?
2013 Credit Sales |
c. What is the amount that Platinum recorded as bad debt expenseon its 2013 income statement?
2013 Bad debt expense |
d. Assuming Platinum used a balance sheet approach with a singlebad debt rate (rather than multiple rates from aging specificreceivables) in estimating bad debt expense, what is the bad debtrate applied in 2013?
2013 debt rate |
Related questions
Swathmore Clothing Corporation grants its customers 30 daysâcredit. The company uses the allowance method for its uncollectibleaccounts receivable. During the year, a monthly bad debt accrual ismade by multiplying 2% times the amount of credit sales for themonth. At the fiscal year-end of December 31, an aging of accountsreceivable schedule is prepared and the allowance for uncollectibleaccounts is adjusted accordingly.
| At the end of 2012, accounts receivablewere $606,000 and the allowance account had a credit balance of$70,000. Accounts receivable activity for 2013 was as follows:
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Swathmore Clothing Corporation grants its customers 30 daysâcredit. The company uses the allowance method for its uncollectibleaccounts receivable. During the year, a monthly bad debt accrual ismade by multiplying 3% times the amount of credit sales for themonth. At the fiscal year-end of December 31, an aging of accountsreceivable schedule is prepared and the allowance for uncollectibleaccounts is adjusted accordingly. |
At the end of 2012, accounts receivablewere $590,000 and the allowance account had a credit balance of$54,000. Accounts receivable activity for 2013 was as follows: |
| Beginningbalance | $ | 590,000 | |
| Credit sales | 2,700,000 | ||
| Collections | (2,563,000 | ) | |
| Write-offs | (47,000 | ) | |
| Ending balance | $ | 680,000 | |
| The companyâs controllerprepared the following aging summary of year-end accountsreceivable: |
| Summary | ||||||
| Age Group | Amount | Percent Uncollectible | ||||
| 0â60 days | $ | 410,000 | 5 | % | ||
| 61â90 days | 97,000 | 11 | ||||
| 91â120 days | 57,000 | 27 | ||||
| Over 120 days | 116,000 | 38 | ||||
| Total | $ | 680,000 | ||||
| Required: |
| 1. | Prepare a summary journal entry to record the monthly bad debtaccrual and the write-offs during the year. (If no entry isrequired for a particular event, select "No journal entry required"in the first account field.) |
| 2. | Prepare the necessary year-endadjusting entry for bad debt expense. (If no entry isrequired for an event, select "No journal entry required" in thefirst account field.) |
| 3.1 | What is total bad debt expensefor 2013? |
| 3.2 | Calculate the amount of accountsreceivable that would appear in the 2013 balance sheet? |
Swathmore Clothing Corporation grants its customers 30 daysâcredit. The company uses the allowance method for its uncollectibleaccounts receivable. During the year, a monthly bad debt accrual ismade by multiplying 3% times the amount of credit sales for themonth. At the fiscal year-end of December 31, an aging of accountsreceivable schedule is prepared and the allowance for uncollectibleaccounts is adjusted accordingly. |
At the end of 2012, accounts receivablewere $578,000 and the allowance account had a credit balance of$42,000. Accounts receivable activity for 2013 was as follows: |
| Beginningbalance | $ | 578,000 | |
| Credit sales | 2,640,000 | ||
| Collections | (2,503,000 | ) | |
| Write-offs | (41,000 | ) | |
| Ending balance | $ | 674,000 | |
| The companyâs controllerprepared the following aging summary of year-end accountsreceivable: |
| Summary | ||||||
| Age Group | Amount | Percent Uncollectible | ||||
| 0â60 days | $ | 380,000 | 5 | % | ||
| 61â90 days | 100,000 | 11 | ||||
| 91â120 days | 51,000 | 21 | ||||
| Over 120 days | 143,000 | 32 | ||||
| Total | $ | 674,000 | ||||
| Required: |
| 1. | Prepare a summary journal entry to record the monthly bad debtaccrual and the write-offs during the year. (If no entry isrequired for a particular event, select "No journal entry required"in the first account field.) |
| 2. | Prepare the necessary year-endadjusting entry for bad debt expense. (If no entry isrequired for an event, select "No journal entry required" in thefirst account field.) |
| 3.1 | What is total bad debt expensefor 2013? |
| 3.2 | Calculate the amount of accountsreceivable that would appear in the 2013 balance sheet? |
