How would accounts receivable appear in the balance sheet

Reference no: EM131988316

Problem

Swathmore Clothing Corporation grants its customers 30 days' credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 2% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly.

At the end of 2015, accounts receivable were $608,000 and the allowance account had a credit balance of $72,000. Accounts receivable activity for 2016 was as follows:

Beginning balance	608,000
Credit sales	2,790,000
Collections	(2,653,000)
Write-offs	(56,000)
Ending balance	689,000

The company's controller prepared the following aging summary of year-end accounts receivable:

	Summary
Age Group	Amount	Percent Uncollectible
0-60 days	455,000	5	%
61-90 days	76,000	14
91-120 days	66,000	25
Over 120 days	92,000	40
Total	689,000

Required:

1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year.

2. Prepare the necessary year-end adjusting entry for bad debt expense.

3-1. What is total bad debt expense for 2016?

3-2. How would accounts receivable appear in the 2016 balance sheet?

Reference no: EM131988316

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