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10 September, 05:46

Accounts receivable, bad debts, credit sales, and cash collections analysis At the beginning of the year, accounts receivable were $144,000 and the allowance for bad debts was $11,500. During the year, sales (all on account) were $600,000, cash collections were $580,0000, bad debts expense totaled $14,200, and $12,000 of accounts receivable were written off as bad debts. Calculate the balances at the end of the year for the Accounts Receivable and Allowance for Bad Debts accounts. (Hint: Use T-accounts to analyze each of these accounts, plug in the amounts that you know, and solve for the ending balances.)

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  1. 10 September, 09:00
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    Ending Balance of Accounts Receivables is $152,000

    Ending Balance of Allowance for Bad Debts Account $13,700

    Explanation:

    The question says to calculate the balances at the end of the year. For Accounts Receivable and the Allowance for the Bad Debts Accounts

    First, the Accounts Receivables Ending Balance $

    = The Beginning Balance of Accounts Receivable 144,000

    Add Sales on Account 600,000

    Less Cash Collections (580,000)

    Write offs (12,000)

    Ending Balance of Accounts Receivables is $152,000

    Secondly, the ending balance for Allowance for Bad Debts account

    = The beginning Balance of Allowance $11,500

    less: The written off value (12,000)

    Add: The Bad debt expense $14,200

    Ending Balance of Allowance for Bad Debts Account $13,700
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