QuestionDecember 14, 2025

During Burns Company's first year of operations, credit sales totaled 180,000 and collections on credit sales totaled 125,000 Burns estimates that bad debt losses will be 1.0% of credit sales. By year-end, Burns had written off 500 of specific accounts as uncollectible. Required: 1. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense. 2. Show the year-end balance sheet presentation for accounts receivable. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Show the year-end balance sheet presentation for accounts receivable.

During Burns Company's first year of operations, credit sales totaled 180,000 and collections on credit sales totaled 125,000 Burns estimates that bad debt losses will be 1.0% of credit sales. By year-end, Burns had written off 500 of specific accounts as uncollectible. Required: 1. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense. 2. Show the year-end balance sheet presentation for accounts receivable. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Show the year-end balance sheet presentation for accounts receivable.
During Burns Company's first year of operations, credit sales totaled 180,000 and collections on credit sales totaled 125,000 Burns estimates that bad debt losses will be 1.0% of credit sales. By year-end, Burns had written off 500 of specific accounts as uncollectible. Required: 1. Prepare all appropriate journal entries relative to uncollectible accounts and bad debt expense. 2. Show the year-end balance sheet presentation for accounts receivable. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Show the year-end balance sheet presentation for accounts receivable.

Solution
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Answer

1. Journal Entries: - Bad Debt Expense: Debit Bad Debt Expense \1,800 Credit Allowance for Doubtful Accounts \1,800 - Write-off: Debit Allowance for Doubtful Accounts \500 Credit Accounts Receivable \500 Explanation 1. Calculate Bad Debt Expense Bad\ Debt\ Expense = 1.0\% \times \180,000 = \1,800 2. Journal Entry for Bad Debt Expense Debit Bad Debt Expense \1,800, Credit Allowance for Doubtful Accounts \1,800 3. Journal Entry for Write-off Debit Allowance for Doubtful Accounts \500, Credit Accounts Receivable \500

Explanation

1. Calculate Bad Debt Expense<br /> $Bad\ Debt\ Expense = 1.0\% \times \$180,000 = \$1,800$<br /><br />2. Journal Entry for Bad Debt Expense<br /> Debit Bad Debt Expense $\$1,800$, Credit Allowance for Doubtful Accounts $\$1,800$<br /><br />3. Journal Entry for Write-off<br /> Debit Allowance for Doubtful Accounts $\$500$, Credit Accounts Receivable $\$500$
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