Reference no: EM132804865
Problem - At December 31, 2021, Metlock, Inc. reported this information on its balance sheet.
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Accounts receivable
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$573,000
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Less: Allowance for doubtful accounts
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37,000
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During 2022, the company had the following transactions related to receivables.
1. Sales on account $2,396,000.
2. Sales returns and allowances 47,000.
3. Collections of accounts receivable 2,313,000.
4. Write-offs of accounts receivable deemed uncollectible 38,000.
5. Recovery of bad debts previously written off as uncollectible 16,000.
Required -
1. Prepare the journal entries to record each of these five transactions. Assume that no cash discounts were taken on the collections of accounts receivable.
2. Enter the January 1, 2022, balances in Accounts Receivable and Allowance for Doubtful Accounts, post the entries to the two accounts (use T-accounts), and determine the balances.
3. Prepare the journal entry to record bad debt expense for 2022, assuming that aging the accounts receivable indicates that estimated bad debts are $47,000.
4. Compute the accounts receivable turnover and average collection period, assuming the expected bad debt information provided in (c).