Swathmore Clothing Corporation grants its customers 30 days' credit. The company uses the allowance method for its

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Swathmore Clothing Corporation grants its customers 30 days' credit. The company uses the allowance method for its uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 3% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly.
At the end of 2017, accounts receivable were $574,000 and the allowance account had a credit balance of $54,000. Accounts receivable activity for 2018 was as follows:
Beginning balance ............................. $ 574,000
Credit sales ..................................... 2,620,000
Collections ...................................... (2,483,000)
Write-offs ...................................... (68,000)
Ending balance ............................... $ 643,000
The company's controller prepared the following aging summary of year-end accounts receivable:
align="center">Swathmore Clothing Corporation grants its customers 30 days' credit. The

Required:
1. Prepare a summary journal entry to record the monthly bad debt accrual and the write-offs during the year.
2. Prepare the necessary year-end adjusting entry for bad debt expense.
3. What is total bad debt expense for 2018? How would
accounts receivable appear in the 2018 balance sheet?

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...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Intermediate Accounting

ISBN: 9781259722660

9th Edition

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

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