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 balance of Accounts Receivable

The formula for ending balance of Accounts Receivable is: Beginning balance + Credit sales - Collections - Write - offs.
$$\text{Accounts Receivable ending balance}=35000 + 193000-164000 - 2870$$
$$=35000+193000-(164000 + 2870)$$
$$=228000 - 166870$$
$$=61130$$

Step2: Calculate ending balance of Allowance for Bad Debts

The formula for ending balance of Allowance for Bad Debts is: Beginning balance - Write - offs+Bad debt expense.
$$\text{Allowance for Bad Debts ending balance}=2752-2870 + 5790$$
$$=(2752+5790)-2870$$
$$=8542 - 2870$$
$$=5672$$

Step3: Calculate Net Accounts Receivable

The formula for Net Accounts Receivable is: Accounts Receivable ending balance - Allowance for Bad Debts ending balance.
$$\text{Net Accounts Receivable}=61130-5672 = 55458$$

Answer:

• Accounts Receivable ending balance: $61,130$
• Allowance for Bad Debts ending balance: $5,672$
• Net Accounts Receivable: $55,458$
• Premier expects to collect $55,458$ (which is the Net Accounts Receivable amount)