At December 31, 2012, Knecland Inc. had $150,000 of accounts receivable and $5,000 in the allowance for

Question:

At December 31, 2012, Knecland Inc. had $150,000 of and $5,000 in the allowance for doubtful accounts.
In 2013, the company had $750,000 in credit sales and collected $776,500 on accounts. Kneeland also wrote off $3,500 for specific accounts determined to be uncollectible. The company uses the aging method to estimate bad debts, and management has estimated that the allowance for doubtful accounts for December 31, 2013 should be $4,000.
Required:
a. Provide the journal entry to record bad debts expense for the year 2013. (Ignore information contained in part (b) below.)
b. While auditing the books of Kneeland, you discover that the company’s bookkeeper has erroneously recorded a transaction: for one customer who went bankrupt in 2013, Kneeland wrote off the receivable (of $ 1,500) with a debit directly to had debts expense. Determine the error’s effects (overstated/understated) on the December 31, 2013 allowance for doubtful accounts) and the income statement for the year 2013.
c. In January 2014, the company factored all of its receivables ($120,000) without recourse for proceeds of $110,000. Provide the journal entry to record this transaction. 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
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