question archive Sensational Aqua Sports Corp

Sensational Aqua Sports Corp

Subject:BusinessPrice: Bought3

Sensational Aqua Sports Corp. (SAS) is a publicly reportable enterprise

with a December 31 year end. Select details regarding SAS's accounts receivables (ARs) and allowance for doubtful accounts (AFDA) follow:
Closing balance AFDA 12/31/20X3
$46,750
Net sales 20X4
$12,235,000
Percentage of net sales made on credit terms
90%
Net credit sales in December 20X4
$1,310,000
Monthly estimate of bad debt expense
1% of net credit sales
Bad debts written off in 20X4 during the year
$112,000
20X4 collection of ARs written off in 20X3
$1,895
Summary aged ARs at 12/31/20X4
Specifically identified as being uncollectable
% allowance required
1-30 days
$ 985,900
$ 0
1%
31-60 days
352,500
0
5%
61-90 days
42,400
16,700
10%
>90 days
12,980
7,980
25%
$ 1,393,780
SAS processes a journal entry each month end (including December) to provide for its estimated bad debt expense for the month based on credit sales. At year end, as part of its adjusting entry process, it then uses the aging method to determine the required balance for the AFDA account.
Required:
Prepare journal entries to record the following:
a) Recovery of the AR written off in 20X3. (Prepare two journal entries.)
b) Provision for the estimated bad debt expense in December 20X4 based on credit sales.
c) Year-end adjusting entries to provide for the writeoff of specifically identified accounts and to bring the balance of the AFDA account to the required balance as at December 31, 20X4.

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Related Questions