Prepare the journal entry to record the bad debt expense

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Reference no: EM133087689

Question - At December 31, 2021, Cullumber Industries reports the following selected accounts from the unadjusted trial balance for its first year of operations:

Account

Debit

Credit

Accounts receivable

$868,000

 

Accounts payable

 

$434,000

Cash

49,600

 

Cost of goods sold

2,170,000

 

Interest receivable

1,400

 

Interest revenue

 

2,800

Merchandise inventory

403,000

 

Notes receivable, due April 10, 2022

55,800

 

Prepaid insurance

9,920

 

Refund liability

 

65,000

Short-term investments

62,000

 

Sales

 

3,205,400

Sales returns and allowances

124,000

 

Unearned revenue

 

31,000

Required -

a. Prepare the journal entry to record the bad debt expense on December 31, 2021, assuming the credit manager estimates that 4% of the accounts receivable will become uncollectible.

b. Prepare the current assets section of the balance sheet for Cullumber Industries on December 31, 2021.

c. Calculate the receivables turnover and collection period. (Remember that this is the end of the first year of business.).

Reference no: EM133087689

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