Question

Teddy Company began operations on January 1, 20X1. The company has an accounts receivable balance of $426900 at the end of its accounting period on December 31, 20X1. This balance includes some past due accounts. Based on industry averages, Teddy estimates that $19420 of the December 31 accounts receivable will become uncollectible. At this time, Teddy Company ________ which customer accounts will become uncollectible. The adjusting entry that Teddy Company should record for bad debt expense on December 31, 20X1 is: 12/31/X1 _____________ DR_________ _____________ CR__________ On the income statement, the Bad Debt Expense will be matched against _______. On the balance sheet, the Allowance for Doubtful Accounts will be _______ the balance in Accounts Receivable. This amount is called the _________ and represents the amount that the company ________ to collect on its accounts receivable. Teddy Company’s Accounts Receivable and Allowance for Doubtful Accounts on December 31, 20X1, before adjusting entries, are shown below. Update these T-accounts for the adjusting entry for Bad Debt Expense, showing the balance in Teddy Company’s Accounts Receivable and Allowance for Doubtful Accounts after adjusting entries have been made. Accounts Receivable 12/31/X1 $426900 12/31/X1 ________ Allowance for Doubtful Accounts 1/1/X1 $0 adjusting entry ______ 12/31/X1 ______ Determine the amount of Bad Debt Expense that Teddy Company should report in its 20X1 income statement and the net realizable value of Teddy Company’s Accounts Receivable after the adjusting entry is made on December 31, 20X1. Income Statement: Bad Debt Expense $_______ Balance Sheet: Accounts Receivable, Dec. 31, 20X1 $_______ Less: Allowance for Doubtful Accounts Net Realizable Value of Accounts Receivable, Dec. 31, 20X1 $_______ At a(n) ________ point in the future, specific customer accounts will be determined to be uncollectible. At that point in time, the specific account receivable is written off by debiting ________ and crediting ________. On January 12, 20X2, J. Thorleif’s account balance of $5,530 with Teddy Company is determined to be uncollectible. Provide the journal entry to write-off J. Thorleif’s account receivable on January 12, 20X2: 1/12/X2 ___________ DR__________ ___________ CR__________ Teddy Company’s Accounts Receivable and Allowance for Doubtful Accounts on December 31, 20X1, after adjusting and closing entries, are shown below. Update these T-accounts for the write-off of the J. Thorleif account receivable, showing the balance in Teddy Company’s Accounts Receivable and Allowance for Doubtful Accounts immediately following the write-off. Accounts Receivable 12/31/X1 _________ 1/12/X2 __________ 1/12/X2 _________ Allowance for Doubtful Accounts 12/31/X1 ___________ 1/12/X2 __________ 1/12/X2 ___________ Expert Answer

 



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