Question

on june 30, premier party planners had a $35,000 balance in accounts receivable and a $2,752 credit balance in allowance for bad debts. during july, premier made credit sales of $193,000. july collections on account were $164,000, and write - offs of uncollectible receivables totaled $2,870. bad debt expense is estimated as 3% of credit sales. no sales returns are expected. ignore cost of goods sold.
read the requirements.
(d) finally, record the entry to journalize the bad debt expense.

requirement 2. show the ending balances in accounts receivable, allowance for bad debts, and net accounts receivable at july 31. how much does premier expect to collect?
in the following t - accounts, enter the beginning balances, the adjusting entries and compute the ending balances. (enter the corresponding letter as the posting reference.)

Explanation:

Step1: Calculate ending Accounts Receivable

Beginning Accounts Receivable: $35,000
Credit sales: $193,000 (increase Accounts Receivable)
Collections: $164,000 (decrease Accounts Receivable)
Write - offs: $2,870 (decrease Accounts Receivable)
$$\text{Ending Accounts Receivable}=35000 + 193000-164000 - 2870=61130$$

Step2: Calculate ending Allowance for Bad Debts

Beginning Allowance for Bad Debts: $2,752 (credit)
Write - offs: $2,870 (debit)
Bad debt expense (from part (d)): $5,790 (credit)
$$\text{Ending Allowance for Bad Debts}=2752-2870 + 5790=5672$$

Step3: Calculate Net Accounts Receivable

$$\text{Net Accounts Receivable}=\text{Ending Accounts Receivable}-\text{Ending Allowance for Bad Debts}=61130 - 5672 = 55458$$

Answer:

• Ending Accounts Receivable: $61,130
• Ending Allowance for Bad Debts: $5,672
• Net Accounts Receivable: $55,458