Calculate the amount of bad debt expense at the end of 2024

Reference no: EM133659710

Question: Sharp company uses the income statement approach to calculate and record bad debt expense. At the end of 2024 they estimate that 5% of sales will be uncollected. Total sales for 2024 was $160,000. The company decided to change to the accounts receivable approach in 2025. They expect that 10% of accounts receivable will be uncollectible.

Other information is as follows:
2024 2025
Write off customer Harry Smith (April 9) 2,500
Write off of customer Joe Kalic (June 23) 8,000
Recovery of customer Joe Kalic (November 2) 6,000
Write off customer Bobby Koerner (March 5) 5,000
Unadjusted balance of Allowance for Doubtful Accounts at December 31, 2024 is $5,000 credit.
Accounts Receivable balance at December 31, 2025 is $150,000 debit.

Required:

1 (a) Calculate the amount of bad debt expense at the end of 2024

1(b) Record the journal entry to record bad debt expense for 2024

2 (a) Calculate the amount of bad debt expense at the end of 2025

2(b) Record the journal entry to record bad debt expense for 2025

3. Record the journal entries to record the write off in 2024 and then the subsequent recover in 2024

Reference no: EM133659710

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