The December 31,2011 statement of financial position of Shylark Limited had Trade Receivables of $450,000 and a credit balance in Allowance for Doubtful Accounts of $45,000.During 2012 the following transactions occurred: service revenue billed on account,$1,500,000; collections from customers,$1,300,000; accounts written off $37,000; previously written off accounts of $4,000 were collected.
Required:
(a)Record the 2012 transactions.
(b)If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 5% of accounts receivable,what is the adjusting entry at December 31,2012?

Question

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The Answer of The December 31,2011 statement of financial position of Shylark Limited had Trade Receivables of $450,000 and a credit balance in Allowance for Doubtful Accounts of $45,000.During 2012 the following transactions occurred: service revenue billed on account,$1,500,000; collections from customers,$1,300,000; accounts written off $37,000; previously written off accounts of $4,000 were collected.
Required:
(a)Record the 2012 transactions.
(b)If the company uses the percentage of receivables basis to estimate bad debts expense and determines that uncollectible accounts are expected to be 5% of accounts receivable,what is the adjusting entry at December 31,2012?

The December 31,2011 Statement of Financial Position of Shylark Limited