Shine King Cleaning uses the allowance method to estimate bad debts. Consider the following January transactions for Shine King Cleaning:
Jan. 1 Performed cleaning service for Debbie’s D-list for $ 8,000 on terms 3/10, n/20.
10 Borrowed money from North Spot Bank, $ 10,000, 7% for 180 days.
12 After discussions with Pierre’s Wig Stand, Shine King has determined that $ 225 of the receivable owed will not be collected. Wrote off this portion of the receivable.
15 Sold goods to Watertown for $ 4,000 on terms 4/10, n/30. Cost of goods sold was $ 600.
28 Sold goods to Bridget, Inc. for cash of $ 1,200 (cost $ 280).
28 Collected from Pierre’s Wig Stand $ 225 of receivable previously written off.
29 Paid cash for utilities of $ 350.
31 Created an aging schedule for Shine King for accounts receivable. Shine King determined that $ 4,000 of receivables were 2% uncollectible and $ 9,775 of receivables were 15% uncollectible. Shine King determined the total amount of estimated uncollectible receivables and adjusted the Allowance for Bad Debts assuming a credit balance of $ 240 in the account. (Round to nearest whole dollar.)

1. Prepare all required journal entries for Shine King.
2. Show how net accounts receivable would be reported on the balance sheet as of January 31.

  • CreatedJanuary 16, 2015
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