Reference no: EM132489163
Question - Richards Company uses the allowance method of accounting for bad debts.
The following summary schedule was prepared from an aging of accounts receivable outstanding on December 31 of the current year.
No. of Days Probability Outstanding Amount of Collection
0-30 days $500,000 .98
31-60 days 200,000 .90
Over 60 days 100,000 .80
The following additional information is available for the current year:
Net credit sales for the year $4,000,000
Allowance for Doubtful Accounts: Balance, January 1 45,000 (cr)
Balance before adjustment, December 31 2,000 (dr)
During the period, Richards company recovered 3,000 accounts that were previously written off. Richards company records bad debts only at the end of each reporting period requirements:
Required -
a. Provide the entry to record bad debt expense for the year.
b. Compute for the amount of accounts written-off during the period.
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