Prepare journal entries to record the credit sales

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Question - Custom Designs, Inc. uses the allowance method to estimate and record bad debt expense. It has an accounts receivable balance of $90,000 and an allowance for uncollectible accounts credit balance of $6,200. Suppose an account receivable balance of $1,200 from one customer is determined to be uncollectible and is written off. What was the net accounts receivable amount before and after the write off?

On January 1, 20X1, Mechanical Engineers, Inc. had an accounts receivable balance of $506,000 and a credit balance in the allowance for uncollectible accounts of $45,000. During January, the company had credit sales of $2,150,000, collections on credit sales of $1,950,000, and write offs of uncollectible accounts receivable totaling $41,000. All of the company's sales are credit sales.

a) Prepare journal entries to record the credit sales, cash collections, and accounts receivable write offs for January.

b) Mechanical Engineers, Inc. estimates bad debt expense at 2.5% of credit sales. Prepare the journal entry for bad debt expense.

c) Show the balance sheet presentation of accounts receivable.

Reference no: EM132773629

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