The following information pertains to Mountain High Campers.
A. Mountain High Campers estimates bad debt expense at 3/5% of credit sales. The company reported accounts receivable and allowance for uncollectible accounts balances of 486,000 and 220 (cr) respectively, at Dec. 31, 2012. During 2013, Mountain High s credit sales and collections were 415,000 and 519,000 respectively, and 3,200 in bad accounts were written off.
1. Prepare the adjusting entry to record bad debt expense for 2013 (show supporting calculations or use T accounts to support your answer).
2. Mountain High’s accounts receivable at December 31, 2013, are________________.
3. Mountain High’s adjusted allowance for uncollectible accounts at December 31, 2013, is_________.
4. How would the amount in A1 differ if the allowance account had an ending balance on December 31, 2012, of 120 (dr).
B. Mountain High estimates bad debts on an analysis of receivables. An aging schedule estimates bad debts to be 3000. Using the relevant data from Part A, answer the same 4 questions.
C. Prepare a summary journal entry (all bad accounts written off in a single entry) if Mountain High had used the direct write-off method of accounting for uncollectible accounts.