Question

johnson company calculates its allowance for uncollectible accounts as 15% of its ending balance in gross accounts receivable. the allowance for uncollectible accounts had a credit balance of $16,000 at the beginning of 2021. no previously written-off accounts receivable were reinstated during 2021. at 12/31/2021, gross accounts receivable totaled $266,700, and prior to recording the adjusting entry to recognize bad debts expense for 2021, the allowance for uncollectible accounts had a debit balance of 29,300. required: 1. what was the balance in gross accounts receivable as of 12/31/2020? 2. what journal entry should johnson record to recognize bad debt expense for 2021? 3. assume johnson made no other adjustment of the allowance for uncollectible accounts during 2021. determine the amount of accounts receivable written off during 2021. 4. if johnson instead used the direct write-off method, what would bad debt expense be for 2021?

Answer 1

Gross accounts receivable 12/31/2020= $16000/ 15% = $106,667

Accounts written off = $16000 - (- $29300) = $45,300

bad debt expense direct method = $45,300

Debt is a duty that calls for one birthday celebration, the debtor, to pay cash or another agreed-upon cost to every other party, the creditor. Debt is a deferred payment, or collection of payments, which differentiates it from a direct purchase. The debt may be owed via a sovereign kingdom or USA, nearby government, business enterprise, or person. Industrial debt is normally concerned to contractual phrases regarding the amount and timing of repayments of major and hobby. Loans, bonds, notes, and mortgages are all sorts of debt. In economic accounting, debt is a kind of financial transaction, as wonderful from fairness. The time period also can be used metaphorically to cowl moral obligations and different interactions no longer based totally on a monetary cost. For instance, in Western cultures, someone who has been helped by using a second person is occasionally said to owe a "debt of gratitude" to the second individual.

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