Majestic Equipment Sales Company, which sells only on account, had a $120,000 balance in its accounts receivable

Question:

Majestic Equipment Sales Company, which sells only on account, had a $120,000 balance in its and a $4,200 balance in its allowance for doubtful accounts on December 31, 2011. During 2012, the company's sales of equipment were $820,000, and its total cash collections from customers were $780,000.
During the year, the company concluded that customers with accounts totalling $6,000 would be unable to pay, and wrote these receivables off. However, one of these customers subsequently made a payment of $850. At the end of 2012, management decided that it would use an estimate for bad debts of 1% of its credit sales.
Required:
a. Prepare the journal entries to record all the 2012 transactions, including the adjustment for bad debts expense at year end.
b. Show how the section of the at December 31, 2012, would be presented.
c. What amount of bad debts expense would appear in the statement of earnings for the year ended December 31, 2012? 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...