At March 31, 2024, the trial balance of Agape Company contained the following amounts before adjustment:

Instructions
a. Prepare the adjusting entry at March 31, 2024, to record bad debt expense, assuming that the aging schedule indicates that $14,100 of accounts receivable will be uncollectible.
b. Repeat part (a) assuming that, instead of a credit balance, there is a $1,200 debit balance in Allowance for Doubtful Accounts.
c. Calculate the carrying amount of Accounts Receivable for Agape Company based on the answer in part (b).
d. During the next month, April 2024, a $3,600 account receivable is written off as uncollectible. Prepare the journal entry to record the write off.
e. What type of account is Allowance for Doubtful Accounts? How does it affect how Accounts Receivable is reported on the balance sheet at the end of the accounting period?

Taking It Further

The owner of Agape Company wants to change the company’s credit policy for its customers. The change would require all customers to pay for their goods and services in cash immediately upon completion of the performance obligation. Prepare a memo to the owner explaining the advantages of extending credit to customers.

Transcribed Image Text:

Accounts Receivable Allowance for Doubtful Accounts Sales Revenue Debit $462,000 Credit $ 1,200 1,164,000