Crystal Clear Cleaning uses the allowance method to estimate bad debts. Consider the following January transactions for Crystal Clear:
Jan. 1 Performed cleaning service for Debbie's D-list for $9,000 on account with terms 3/10, n/20.
10 Borrowed money from High Roller Bank, $20,000, is making a 180 day, 15% note.
12 After discussions with Merry Cleaners, Crystal Clear has determined that $275 of the receivable owed will not be collected. Wrote off this portion of the receivable.
15 Sold goods to Westford for $8,000 on account with terms 5/10, n/30. Cost of Goods Sold was $400.
28 Sold goods to Meaghan, Inc. for cash of $2,000 (cost $350).
28 Collected from Merry Cleaners, $275 of receivable previously written off.
29 Paid cash for utilities of $450.
31 Created an aging schedule for Crystal Clear for accounts receivable. Crystal Clear determined that $8,100 of receivables were 5% uncollectible, $9,775 of receivables were 15% uncollectible, and $850 of receivables were 30% uncollectible. Crystal Clear determined the total amount of estimated uncollectible receivables and adjusted the Allowance for Bad Debts assuming a credit balance of $240 in the account.
Requirements
-Prepare all required journal entries for Crystal Clear.
-Show how net accounts receivable would be reported on the balance sheet as of January 31, 2018.