P7-2 solution - PROBLEM 7-2 1 Net sales Percentage Bad debt...

PROBLEM 7-2
1. Net sales ................................................................................................................ $1,200,000
Percentage ............................................................................................................. 1 1/2%
Bad debt expense ................................................................................................... $ 18,000
2. Accounts receivable .............................................................................................. $1,750,000
Amounts estimated to be uncollectible ................................................................. (180,000 )
Net realizable value ............................................................................................... $1,570,000
3. Allowance for doubtful accounts 1/1/14 ............................................................... $ 17,000
Establishment of accounts written off in prior years ............................................. 8,000
Customer accounts written off in 2014 ................................................................. (30,000)
Bad debt expense for 2014 ($2,400,000 X 3%) .................................................... 72,000
Allowance for doubtful accounts 12/31/14 ........................................................... $ 67,000
4. Bad debt expense for 2014 ....................................................................................