a) Prepare all journal entries to record the activity for the items above for 2020b) Prepare any journal entries required at December 31, 2020 to record bad debt expense for the year Growing Crystals Corp. has provided the following information relating to its sales for the past year,which ended December 31, 2020. The company uses the balance sheet (accounts receivable) method ofaccounting for bad debt expense.Estimated % of accounts receivable that will be uncollectable5%Jan. 1, 2020, balance in the allowance for doubtful account$2,000 cr(this is before any adjusting entries)Jan. 1, 2020, balance in the accounts receivable account$40,000 drCredit sales (2020)$650,000Write offs of uncollectible accounts receivable (2020)$6,200Collections of previously written off amounts (2020)$900Cash received in payment of accounts receivable (2020)$570,000

Account receivable means the amount due from customer whom we sold the goods on credit. Allowance…

Answered: a) Prepare all journal entries to…

a) Prepare all journal entries to record the activity for the items above for 2020 b) Prepare any journal entries required at December 31, 2020 to record bad debt expense for the year

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 6MC: Prior to adjustments, Barrett Companys account balances at December 31, 2019, for Accounts...

See similar textbooks

Related questions

Q: Star, Inc. is a manufacturer and retailer of household furniture. Your audit of the company's…

A: As per PAS 1, Presentation of financial statements, Current liabilities are those liabilities that…

Q: Fleener Company is in the process of refinancing some long-term debt. Its fiscal year ends on…

Q: Safety First Company completed all of its October 31,2020 adjustments in preparation for preparing…

A: Impairment exists if recoverable amount is less than carrying amount of an assets Impairment…

Q: At December 31, the end of the reporting period, the analysis of a loss contingency indicates that…

A: Contingent Liability Contingent liability is one form of liability that arises based on a…

Q: Intercom Company is planning to refinance certain short-term obligations on a long term basis. The…

A: Solution are as follows.

Q: For each of the following independent situations, give the journal entries to adjust and correct the…

A: These are the Journal entries that are recorded in a Company's General Ledger that occurs at the end…

Q: In examining the books of Ula Company, you found out that certain adjustments had been overlooked at…

A: When an error is detected, financial statements which have the impact of the errors are prepared…

Q: The following information was taken from the books of Towel Talk for January and February 2021: List…

A: The answer is given below:

Q: Prepare adjusting entries to record the depreciation expenses and estimated bad debts on 31 Jan.…

A: Adjusting entries are those entries which are passed at the end of accounting period to correcly…

Q: At March 31, 2019, the end of the first year of operations at Lukancic Inc., the firm’s accountant…

A: Adjusting journal entry: At year-end when the company finalizes its accounts then any unrecognized…

Q: Required: Prepare a classified balance sheet at December 31, 2021, by updating ending balances from…

A: Balance sheet: One of the financial statements that records the assets, liabilities and the owner’s…

Q: At the end of 2019, Framber Company received $8000 as a prepayment for renting a building to a…

A: A preceding period adjustment will be used to accommodate for an inaccuracy. Any modifications to…

Q: On December 31, 2020, what is the note received from Company B?

A: Note receivable: It is a written promise. The promise is for receiving specific amount of cash on…

Q: On September 1, 2019, a company borrowed cash and signed a 1-year, interest-bearing note on which…

A: Current liabilities : The obligations owed by a company to creditors and suppliers and are to be…

Q: The Richards Company paid for a five-year extended warranty on all of their equipment on March 1,…

A: Given that, Richard company paid five years warranty on all of their equipment on March 1, 2019…

Q: Donald , owner of Dallas Company , begin accounting for bad debts expense . Assume that Dallas…

A: Journal is a book of original entry is which all the financial transactions of the business are…

Q: Trout Company uses the LIFO method for financial reporting purposes but FIFO for internal reporting…

A: Compute the LIFO reserve.

Q: Prepare all 2019 journal entries relating to (a) YellowCard's warranties, (b) YellowCard's loan from…

Q: In the opace under each description, provide the necessary journal entry(s) in the proper form for…

A: Notes payable for entry 1 = Total cost of equipment - Cash paid = $ 56000 - $ 8000 = $ 48000

Q: Prepare the journal entry to record the capitalization of borrowing costs and the recognition of…

A: Capitalized cost refers to the borrowing cost that is required to construct a long-term asset.

Q: Company needs to determine whether the following items require adjusting entries at December 31,…

A: Adjusting Journal Entries The practice of adjusting journal entries are done at the end of the…

Q: The Creative Electronics Company shows the following selected adjusted account balances as at…

A: Current liabilities are a company's short-term financial obligations that are due within a year or…

Q: Record, if necessary, an adjustment for estimated uncollectible accounts at the end of 2021 and the…

A: Entry to be passed in the year of 2021 for the estimated uncollectible Particulars Bad debt…

Q: The Creative Electronics Company shows the following selected adjusted account balances as at…

A: Current liabilities are those liabilities which will be due for repayment within one year or in an…

Q: On September 1, 2019, a company borrowed cash and signed a 1-year,interest-bearing note on which…

A: the current liabilities are the liabilities that are to be paid off within one year.

Q: elmuth maintains a provision for doubtful debts of 4% of ach financial year. s debtors owed N$2 800…

A: Accounting is a medium of communication, like any language that we use. For example, two people can…

Q: On September 1, 2020, a company borrowed cash and signed a 1-year interest bearing note on which…

A: Current liabilities: Liabilities which have to be paid within one year or one operating cycle,…

Q: Coulson Company is in the process of refinancing some long-term debt. Its fiscal year ends on…

Q: e financial statements of Millstone, Inc. include the following information: At December 31 2019…

A: Accounts receivable is the term, which is defined as the payment or proceeds that the company or…

Q: Required: Prepare a classified balance sheet at December 31, 2021, by updating ending balances from…

A: The question is based on the concept of Financial Accounting.

Q: Use the information provided below to prepare the following for November and December 2021: 1.…

A: Cash budget means expected cash receipts and expected cash payment with opening and closing cash…

Q: Prepare the journal entries that should be made by Sage Hill Corporation in 2021. when the amount is…

A: Cash dividend being commonly found dividend payment in companies, is declared by Board of directors…

Q: On October 1, 2020, an entity borrowed cash and signed a three-year interest bearing note on which…

A: In the given case an entity borrowed cash and signed a three-year interest bearing note on which…

Q: Required: 1. Prepare journal entries to record the transactions for 2020 and 2021. 2. Analyze the…

A: Warranty expenses are the expenses which are incurred due to the fact that company provides…

Q: During 2019, P determined that insurance premiums of $12289 for the 3-year period beginning January…

A: Given, Insurance premiums paid for 3 years=$12,289Income tax rate=37%

Q: Required: Prepare the journal entries required from the issuance of the note until its maturity on…

A: Note payable is one of the liability of the business, on which regular interest payments needs to be…

Q: Prepare the income statement, statement of changes inequity and statement of financial position for…

A: Financial statements are statements that are prepared at the end of the period in order to analyse…

Q: On December 31, 2019, $700of salaries has been accrued. (Salaries before accrued amount totaled…

A: Part a:

Q: ncluded in Bonita Company’s December 31, 2020, trial balance are the following accounts: Accounts…

A: Liability refers to the amount which is owned by the company to the outsiders. On the basis of…

Q: Fleener Company is in the process of refinancing some long-term debt. Its fiscal year ends on…

Q: The Meow Company was organized on January 1, 2020, and since its inception has not recognized…

A: prepaid expenses are expenses related to future years but paid in advance. Unearned Income is the…

Q: Splish Corporation borrowed $58,500 on November 1, 2020, by signing a $60,000, 3-month,…

A: Journal Entry: Journal entry is the act of keeping records of transactions in an accounting journal.…

Q: Taking into account all the errors/omissions noted above, prepare the corrected Creditors Control…

A: The given errors/omissions can be corrected by: A. The overcast balance can be reduced by crediting…

Q: Mitchell and O’Brien, CPAs, P.C., prepared 600 business and personal tax returns for the filing…

A: Bad debt expense: For every business, when services are provided on account - there would be some…

Q: Prepare the journal entries, with appropriate journal entry descriptions, for 2020, including any…

A: Prepaid expenses are those expenses which are paid in advance but relates to some future period.…

Q: Assume that rent of P14,400 was paid on September 1, 2021 to cover a one-year period from that date.…

A: Prepaid rent is the amount of rent paid in advance. Rent of 14,400 is for 1 year paid in advance on…

Q: Assume that the business has received notification on 15 April 2020 that a debtor owing $1,850 has…

A: The company which follows direct write off method records bad debts by debiting bad debts expense…

Q: The following Is a portion of the current assets section of the balance sheets of Avantl's, Inc., at…

A: a) Therefore, the bad debt expense recognized for the year is $2,708.

Q: On January 1, 2020, Legrand carrying amount of P500,000 for dete

A: Lease: A lease is an agreement between the two parties where one party gives permission to another…

Q: 27. If salaries of daily paid employees of an Entity for the period from December 27, 2020 to…

A: As posted multiple independent questions we are answering only first question kindly repost the…

Question

a) Prepare all journal entries to record the activity for the items above for 2020

b) Prepare any journal entries required at December 31, 2020 to record bad debt expense for the year

Growing Crystals Corp. has provided the following information relating to its sales for the past year,
which ended December 31, 2020. The company uses the balance sheet (accounts receivable) method of
accounting for bad debt expense.
Estimated % of accounts receivable that will be uncollectable
5%
Jan. 1, 2020, balance in the allowance for doubtful account
$2,000 cr
(this is before any adjusting entries)
Jan. 1, 2020, balance in the accounts receivable account
$40,000 dr
Credit sales (2020)
$650,000
Write offs of uncollectible accounts receivable (2020)
$6,200
Collections of previously written off amounts (2020)
$900
Cash received in payment of accounts receivable (2020)
$570,000

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Bristax Corporation recorded $1,385,660 in credit sales for the year, and $732,410 in accounts receivable. The uncollectible percentage is 3.1% for the income statement method and 4.5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $20,550; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $17,430; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Inferring Accounts Receivable Amounts At the end of 2019, Karras Inc. had a debit balance of 141,120 in its accounts receivable. Additionally, Karras had a credit balance in its allowance for doubtful accounts of 4,350 and 9,420 at the beginning and end of the year, respectively. During the year, Karras made credit sales of 1,530,000, collected receivables in the amount of 1,445,700, and recorded bad debt expense of 83, 750. Required: Next Level Compute the amount of accounts receivable that Karras wrote off during the year and the amount of accounts receivable at the beginning of the year.
Prior to adjustments, Barrett Companys account balances at December 31, 2019, for Accounts Receivable and the related Allowance for Doubtful Accounts were 1,200,000 and 60,000, respectively. An aging of accounts receivable indicated that 106,000 of the December 31, 2019, receivables may be uncollectible. The net realizable value of accounts receivable at December 31, 2019, was: a. 1,034,000 b. 1,094,000 c. 1,140,000 d. 1,154,000
Ink Records recorded $2,333,898 in credit sales for the year and $1,466,990 in accounts receivable. The uncollectible percentage is 3% for the income statement method and 5% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $20,254; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Angelos Outlet used to report bad debt using the balance sheet method and is now switching to the income statement method. The percentage uncollectible will remain constant at 5%. Credit sales figures for 2019 were $866,000, and accounts receivable was $732,000. How much will Angelos Outlet report for 2019 bad debt estimation under the income statement method?
Fortune Accounting reports $1,455,000 in credit sales for 2018 and $1,678,430 in 2019. It has an $825,000 accounts receivable balance at the end of 2018 and $756,000 at the end of 2019. Fortune uses the balance sheet method to record bad debt estimation at 7.5% during 2018. To manage earnings more favorably, Fortune changes bad debt estimation to the income statement method at 5.5% during 2019. A. Determine the bad debt estimation for 2018. B. Determine the bad debt estimation for 2019. C. Describe a benefit to Fortune in 2019 as a result of its earnings management.
Funnel Direct recorded $1,345,780 in credit sales for the year and $695,455 in accounts receivable. The uncollectible percentage is 4.4% for the income statement method and 4% for the balance sheet method. A. Record the year-end adjusting entry for 2018 bad debt using the income statement method. B. Record the year-end adjusting entry for 2018 bad debt using the balance sheet method. C. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $13,888; record the year-end entry for bad debt using the income statement method, and then the entry using the balance sheet method.
Estimating Bad Debts from Receivables Balances The following information is extracted from Shelton Corporations accounting records at the beginning of 2019: During 2019, sales on credit amounted to 575,000, 557,400 was collected on outstanding receivables and 2,600 of receivables were written off as uncollectible. On December 31, 2019, Shell on estimastes its bad debts to be 4% of the outstanding gross accounts receivable balance. Required: 1. Prepare the journal entry necessary to record Sheltons estimate of bad debt expense for 2019. 2. Prepare the Accounts Receivable section of Shelton's December 31, 2019, balance sheet. 3. Compute Shelton's receivables turnover. (Round to one decimal place.) 4. It Sheldon uses IFRS, what might be the heading for the accounts receivable section in Requirement 2?
Millennium Associates records bad debt using the allowance, income statement method. They recorded $299,420 in accounts receivable for the year, and $773,270 in credit sales. The uncollectible percentage is 3.2%. On February 5, Millennium Associates identifies one uncollectible account from Molar Corp in the amount of $1,330. On April 15, Molar Corp unexpectedly pays its account in full. Record journal entries for the following. A. Year-end adjusting entry for 2017 bad debt B. February 5, 2018 identification entry C. Entry for payment on April 15, 2018
Rogan Companys total sales on account for the year amounted to 327,000. The company, which uses the allowance method, estimated bad debts at 1 percent of its credit sales. Required Journalize the following selected entries: 2017 Dec.31 Record the adjusting entry. 2018 Mar. 2Write off the account of A. M. Billson as uncollectible, 584. June 6Write off the account of W. H. Gilders as uncollectible, 492. Check Figure Adjusting entry amount, 3,270
The following accounts receivable information pertains to Luxury Cruises. A. Determine the estimated uncollectible bad debt for Luxury Cruises in 2018 using the balance sheet aging of receivables method. B. Record the year-end 2018 adjusting journal entry for bad debt. C. Assume there was a previous debit balance in Allowance for Doubtful Accounts of $187,450; record the year-end entry for bad debt, taking this into consideration. D. Assume there was a previous credit balance in Allowance for Doubtful Accounts of $206,770; record the year-end entry for bad debt, taking this into consideration. E. On January 24, 2019, Luxury Cruises identifies Landon Walkers account as uncollectible in the amount of $4,650. Record the entry for identification.
Michelle Company reports $345,000 in credit sales and $267,500 in accounts receivable at the end of 2019. Michelle currently uses the income statement method to record bad debt estimation at 4%. To manage earnings more efficiently, Michelle changes bed debt estimation to the balance sheet method at 4%. How much is the difference in net income between the income statement and balance sheet methods? A. $3,100 B. $13,800 C. $10,700 D. $77,500