Kansas Furniture Mart had sales of $1,150,000 during 20X1, including $600,000 of sales on credit. Balances on

Question:

Kansas Furniture Mart had sales of $1,150,000 during 20X1, including $600,000 of sales on credit. Balances on December 31, 20X0, were Accounts Receivable, $120,000, and Allowance for Bad Debts, $10,000. For 20X1 collections of accounts receivable were $560,000. Bad debt expense was estimated at 2% of credit sales, as in previous years. Write-offs of bad debts during 20X1 were $9,000.

1. Prepare journal entries concerning the preceding information for 20X1.

2. Show the ending balances of the balance sheet accounts on December 31, 20X1.

3. Based on the given data, would you advise Eleanor Sarkowski, the president of the store, that the 2% estimated bad debt rate appears adequate?

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...