Question

Shehata Coffee Shop calculated the NET value of its accounts receivable as of December 31, 2019, to be $179,000, based on an aging schedule of accounts receivable. Shehata has also provided the following information: The gross accounts receivable balance on December 31, 2019 was $191,800. Actual uncollectible accounts receivable written off during 2019 totaled $13,400. The Allowance for Uncollectible Accounts balance on January 1, 2019 was $17,800.
Required: Part 1: What account(s) and for what $ value(s) would appear on the Balance Sheet?
Part 2: How much is Shehata's 2019 Bad Debt Expense? Show your detailed calculation for credit, 6 points:
a. 17,200
b. 12,800
c. 8,400
d. 4,400
e. None of the above

Answer 1

Answer:

1. The preparation of balance sheet is shown below:-

2. $8,400

Explanation:

1 Balance sheet

December 31, 2019

Assets                                                  Amount

Current assets  

Accounts receivables                          $191,800

Allowance for uncollectible accounts   ($12,800)

Net accounts receivables                    $179,000

Working note:-

Net accounts receivables = $179,000

Gross accounts receivables = $191,800

Allowance for uncollectible accounts, December 31, 2019 = Gross accounts receivables - Net accounts receivables

= $191,800 - $179,000

= $12,800

2. Bad debt expense = Allowance for uncollectible accounts, December 31, 2019 - (Allowance for uncollectible accounts, January 1, 2019 - Uncollectible accounts written off during 2019)

= $12,800 - ($17,800 - $13,400)

= $12,800 - $4,400

= $8,400