During Burns Company's first year of operations, credit sales totaled $166,000 and collections on credit sales totaled $118,000.

Question

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During Burns Company's first year of operations, credit sales totaled $166,000 and collections on credit sales totaled $118,000.

Burns estimates that bad debt losses will be 2.0% of credit sales. By year-end, Burns had written off $430 of specific accounts as uncollectible. Required: 1. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense. 2. Show the year-end balance sheet presentation for accounts receivable.

Business

1 answer:

Katen [3.5K] · Answer 1 · 2026-04-01T15:55:01+03:00

Response:

1. Create all necessary journal entries concerning uncollectible accounts and bad debt expense.

1

Dr Bad debt expense_______ 3320

Cr Allowance for bad debt_________________ 3320

2

Dr Allowance for bad debt__ 430

Cr Account Receivable_____________________ 430

2. Provide the year-end balance sheet display for accounts receivable.

Accounts receivable__________47570

Net accounts receivable_______44250

Clarification:

Credit transactions 166000

Credit transactions 118000

Bad debt losses are 2%

Written off 430

Allowance 3320

1

Dr Bad debt expense_______ 3320

Cr Allowance for bad debt_________________ 3320

2

Dr Allowance for bad debt__ 430

Cr Account Receivable_____________________ 430

Year-end balance___________48000

Cr Account Receivable_________430

Accounts receivable__________47570

Allowance for bad debts_______3320

Net accounts receivable_______44250