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Sherman Peterson is an attorney in Los Angeles. Peterson uses the direct write-off method to account for uncollectible receivables.At January 31, 2014, Peterson’s accounts receivable totaled $15,000. During February, he earned revenue of $18,000 on account and collected $19,000 on account. He also wrote off uncollectible receivables of $1,800 on February 28, 2014.

Requirements
1.Use the direct write-off method to journalize Peterson’s write-off of the uncollectible receivables.
2.What is Peterson’s balance of Accounts Receivable at February 28, 2014?

Respuesta :

waseemanis1

Answer:

1) Bad debt expense (Debit)           1,800

   Accounts receivable (Credit)      1,800

2) $12,200

Explanation:

1) Write off method of accounting directly credits accounts receivable instead of creating a provision for doubtful debt. Therefore following entry is recognized

Bad debt expense (Debit)             1,800

Accounts receivable (Credit)        1,800

2) Ledger balance of accounts receivable is $ 12,200 calculated as follows:

Opening Balance (31 January 2014)                15,000

Add: Sales on account during February         18,000

Less: Collection during February                    (19,000)                

Less: Written off                                                 (1,800)

Balance at 28 February 2014                        $12,200

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