Colorado Rocky Cookie Company offers credit terms to its customers. At the end of 2021, accounts receivable totaled $700,000. The allowance method is used to account for uncollectible accounts. The allowance for uncollectible accounts had a credit balance of $47,000 at the beginning of 2021 and $28,500 in receivables were written off during the year as uncollectible. Also, $2,700 in cash was received in December from a customer whose account previously had been written off. The company estimates bad debts by applying a percentage of 15% to accounts receivable at the end of the year. Required: 1. Prepare journal entries to record the write-off of receivables, the collection of $2,700 for previously written off receivables, and the year-end adjusting entry for bad debt expense.

2. How would accounts receivable be shown in the 2016 year-end balance sheet?

The correct answer for option (a) is shown below and for option (b) is $595,000.

Explanation:

According to the scenario, the computation of the given data are as follows:

(a). The journal entries are shown as follows:

Uncollectible Allowance A/c Dr. $28,500

To Accounts receivable A/c. $28,500

( Being write-off of receivables recorded)

Accounts receivable A/c Dr. $2,700

To Uncollectible Allowance A/c. $2,700

Cash A/c Dr. $2,700

To Accounts receivable A/c. $2,700

( Being collection of $2,700 recorded)

Bad debt expense A/c Dr. $83,800

To Uncollectible Allowance A/c. $83,800

(  Being bad debt expense is recorded)

Computation:

Beginning Allowance Balance  $47,000  

Amount recovered (Add)          $2,700  

Amount written off (Less)          $28,500  

So, Allowance Balance                  $21,200  

Required balance                             $105,000      ($700,000 × 15%)  

So, Bad debts expense    $83,800

(b).

Accounts receivable      $700,000    

Allowance Balance (Less)$105,000    

Net Accounts receivable$595,000

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.