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Calculate the balance of the allowance for doubtful accounts

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Question - Gomez, Inc. sells machinery and equipment to warehouses. Most sales are on account. On April 1, 2017, the company has a debit balance of $220,000 in accounts receivable and a credit balance of $10,500 in the allowance for doubtful accounts.

During the second quarter (from April 1 through June 30, 2017), Gomez records the following activities:

Total sales of $260,000. $25,000 are in cash, and the remainder is on account.

Collections from customers for previous credit sales totaling $240,000.

Write-offs of two accounts as uncollectible: one for $3,200 and one for $1,700.

Total other expenses of $165,500.

Based on historical averages and expectations about the economy going forward, Gomez calculates bad debt expense as 3.5% of credit sales during the period.

Required - Calculate the following:

1. Calculate the bad debt expense for the quarter ended June 30, 2017.

2. Calculate the balance of accounts receivable on June 30, 2017.

3. Calculate the balance of the allowance for doubtful accounts on June 30, 2017.

4. Calculate the net accounts receivable balance on June 30, 2017.

5. Calculate the net income for the quarter ended June 30, 2017.

Reference no: EM132733497

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