Question

Estimating Uncollectible Accounts and Reporting Receivables over Multiple Periods Weiss Company, which has been in business for three years, makes all of its sales on credit and does not offer cash discounts. Its credit sales, customer collections, and write-offs of uncollectible accounts for its first three years follow. Year Sales 2018 $733,000 2019 857,000 2020 945,000 Collections Accounts Written Off $716,000 $5,300 842,000 5,800 928,000 6,500 a. Weiss recognizes bad debts expense as 1% of sales. (Hint: This means the allowance account is increased by 1% of credit sales regardless of any write-offs and unused balances.) What does Weiss's 2020 balance sheet report for accounts receivable and the allowance for uncollectible accounts? Note: Round your answers to the nearest whole dollar. Note: Do not use a negative sign with your answers. Current Assets Accounts receivable Less allowance for uncollectible accounts $ b. What total amount of bad debts expense appears on Weiss's income statement for each of the three years? 2018 Bad debt expenses 2019 Bad debt expense 2020 Bad debt expense

Answer 1

Requirement:A

Current Assets
Accounts Receivables	$     31,400
Less: Allowance for uncollectible accounts	$     (7,750)	$ 23,650

Working:

Allowance for Uncollectible Accounts					Accounts Receivables
Accounts Written Off	$    5,300	Beginning balance	$           -		Beginning balance	$                   -	Collection	$ 716,000
		Bad Debts	$    7,330		Sales	733000	Writeoff	$      5,300
		End Balance	$    2,030		End Balance	$          11,700
Allowance for Doubtful Accounts					Accounts Receivables
Accounts Written Off	$    5,800	Beginning balance	$    2,030		Beginning balance	$          11,700	Collection	$ 842,000
		Bad Debts	$    8,570		Sales	$        857,000	Writeoff	$      5,800
		End Balance	$    4,800		End Balance	$          20,900
Allowance for Doubtful Accounts					Accounts Receivables
Accounts Written Off	$    6,500	Beginning balance	$    4,800		Beginning balance	$          20,900	Collection	$ 928,000
		Bad Debts	$    9,450		Sales	$        945,000	Writeoff	$      6,500
		End Balance	$    7,750		End Balance	$          31,400

Requirement:B

2018	Bad Debts Expense[733000*1/100]	$        7,330
2019	Bad Debts Expense [857000*1/100]	$        8,570
2020	Bad Debts Expense [945000*1/100]	$        9,450