Reference no: EM132774130

Information on Fog Co. as of Dec.31, 20x1 is as follows:

Net credit sales 4,200,000

Accounts receivable, Dec. 31 651,000

Allowance for bad debts, Dec. 31 (unadjusted) 35,700

Percentage of credit sales 2%

Fog Co. uses the percentage of credit sales in determining bad debts in monthly financial reports and the aging of receivables in annual financial statements. Fog Co.'s aging schedule on Dec. 31, 20x1 is as follows:

Days outstanding         Receivable balances        % uncollectible

0-60                         252,000                             1%

61-120                     189,000                              2%

Over 120                 210,000         6%

TOtal accounts receivables 651,000

• Fog Co. wrote off $ 79,800 accounts and recovered $ 18,900 accounts during the year.
• On Dec. 31, Fog Co. determined that $ 42,000 accounts receivable from a certain customer included in the "61-120 days outstanding" group is 95% collectible and a $ 21,000 account included in the "over 120 days outstanding" group is worthless and needs to be written off.

Requirements:

Problem a. Unadjusted bad debt expense recognized during the year

Problem b. balance of the allowance for bad debts on January 1, 20x1

Problem c. adjusted balance of the allowance accounts on Dec. 31, 20x1

Problem d. adjusted bad debts expense for the year

Problem e. recoverable historical cost of accounts receivable on Dec. 31

Problem f. provide necessary year-end adjusting entries.