Question

Johnson Company calculates its allowance for uncollectible accounts as 10% of its ending balance in gross accounts receivable. The allowance for uncollectible accounts had a credit balance of $13,000 at the beginning of 2021. No previously written-off accounts receivable were reinstated during 2021. At 12/31/2021, gross accounts receivable totaled $216,700, and prior to recording the adjusting entry to recognize bad debts expense for 2021, the allowance for uncollectible accounts had a debit balance of 23,800.

Answer 1

Answer:

A. $130,000

B. 2021

Dr Bad debt expense 45,470

Cr Allowance for uncollectible account 45,470

C. $36,800

D. $36,800

Explanation:

A. Calculation to determine What was the balance in gross accounts receivable as of 12/31/2020

Gross accounts receivable as of 12/31/2020 = $13000/ 10%

Gross accounts receivable as of 12/31/2020= $130,000

B. Preparation of the journal entry that Johnson should record to recognize bad debt expense for 2021

2021

Dr Bad debt expense ($216,700*10% + 23,800) 45,470

Cr Allowance for uncollectible account 45,470

C. Calculation to Determine the amount of accounts receivable written off during 2021.

Accounts receivable written off = $13000 - (-$23,800)

Accounts receivable written off= $36,800

D. Based on the information given in a situation were Johnson used the direct write of method, what would bad debt expense be for 2021 is $36,800