Capital sells its services to customers on account. The
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Capital sells its services to customers on account. The December 31, 2021 balance sheet disclosed the
Accounts Receivable, net of allowance for uncollectible accounts of $32,000
During 2022 the following activities occurred:
Total credit sales
Total cash collections from customers
Accounts receivable written off
1. What is the balance in the Accounts Receivable account at 12/31/2022? (Hint: use a T-account to
post all the information provided above that impacts the Accounts Receivable account in 2022)
2. Calculate the amount of bad debt expense to be recorded at 12/31/2022 under each of the
llowing independent situations and ning no bad debt expense has yet been recorded for
a. Bad debt expense is estimated to be 2% of credit sales for the year.
b. Bad debt expense is calculated using the results of the aging analysis shown below.
An aging of receivable at December 31, 2022, reveals the following:
91 - 120 days
Over 120 days
Percentage of Year-end
Receivables in Group
NOTE: Using an aging of accounts receivable is one approach for using the gross receivables method.
Using an aging approach applies a different percentage to each aging category in determining the
desired ending balance in the allowance account rather than using a single percentage. An aging
approach is more precise because you are adjusting the percentage estimated to be uncollectible based
on the age of the accounts, the older the account the more likely it is to become uncollectible.