Reference no: EM132489950

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 2020, accounts receivable were $604,000 and the allowance account had a credit balance of $68,000. Accounts receivable activity for 2021 was as follows:

Beginning balance $ 604,000

Credit sales 2,770,000

Collections (2,633,000 )

Write-offs (54,000 )

Ending balance $ 687,000

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

Summary Age Group Amount Percent

Uncollectible

  0-60 days   $ 445,000 4 %

61-90 days    72,000    12

91-120 days 64,000 23

Over 120 days 106,000 38

Total $ 687,000

Required:

Question 1. What is the summary journal entry to record the monthly bad debt accrual and the write-offs during the year.

Question 2. What is the necessary year-end adjusting entry for bad debt expense.

Question 3-a. What is total bad debt expense for 2021?

Question 3-b. How would accounts receivable appear in the 2021 balance sheet?