Juniper Company was formed in 2002. Sales have increased on

Juniper Company was formed in 2002. Sales have increased on the average of 5% per year during its first 10 years of existence, with total sales for 2011 amounting to $400,000. Since incorporation, Juniper Company has used the allowance method to account for uncollectible accounts receivable.

On January 1, 2012, the company’s Allowance for Bad Debts had a credit balance of $5,000. During 2012, accounts totaling $3,500 were written off as uncollectible.

Required:

1. What does the January 1, 2012, credit balance of $5,000 in Allowance for Bad Debts represent?

2. Since Juniper Company wrote off $3,500 in uncollectible accounts receivable during

2012, was the prior year’s estimate of uncollectible accounts receivable overstated?

3. Prepare journal entries to record:

a. The $3,500 write-off of receivables during 2012.

b. Juniper Company’s 2012 bad debt expense, assuming an aging of the December 31, 2012, accounts receivable indicates that potential uncollectible accounts at year-end total $9,000.


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...

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